With two weeks to go until Chancellor Rachel Reeves delivers her Autumn Budget, the team at HW Fisher share their thoughts on what they feel the Government should be prioritising when it comes to UK tax policy.
Encourage international wealth back into the UK
Sam Dewes, Private Client Partner said “The non-dom reforms were a flagship tax policy in the Labour Party’s election campaign. Most agreed that some simplification was needed in this area, however, the initial proposals were not very attractive to many wealthy international individuals. Some have already voted with their feet and left the UK to make use of tax incentives elsewhere, including Europe.
“It’s now expected that the Chancellor will water down the proposals. We hope that the Budget provides much needed clarity in this area after months of speculation. We also hope that the new proposals will encourage wealth into the UK and deter others from leaving.”
Unfreeze the nil rate band for Inheritance Tax
Stevie Heafford, Tax Partner said “Inheritance Tax has long been one of Britain’s most unpopular taxes. As a result, a reduction to the rate or at the very least the unfreezing of the nil rate band, would be welcomed by many.
“As it stands, the nil rate band, which is the amount you can pass onto your loved ones without paying any Inheritance Tax, is £325,000. The decision by the government to freeze this figure until 2028, rather than increase it in line with inflation, means that many people have found themselves caught in the Inheritance Tax trap for the first time.
Simplify the tax system and make it accessible
Dan Tomassen, Tax Director said “Past governments have overcomplicated what should be simple by introducing several different reliefs, all with similar outcomes. This is evident for parents where varying reliefs are on offer such as child benefits, childcare vouchers, and free childcare hours. Each of these claims has its own eligibility requirements and claim process.
“It is time for the government to remove the red tape and repackage the different types of relief into one, with single eligibility requirements, which serve the majority of the population. By doing so, taxpayers will be better able to plan for the future and will less likely miss out on support that they are entitled to.”
Give businesses the certainty they need
Toby Ryland, Corporate Tax Partner said “The new government has promised a “Business Tax Roadmap”. In order to benefit businesses, this roadmap needs to be clear and coherent with sufficient detail. For too long businesses have had to plan with uncertainty. If we want true growth for the UK’s economy, this needs to change.
“The government must be upfront about changes to business taxation. If the Chancellor is considering making changes down the line, she should implement those changes now instead and reassure businesses that there will be no further changes introduced during their term. If business rates are to be reformed, we need a clear and simple new system to be introduced, making sure that small businesses are the least impacted.”
Bring back life to town centres across Britain
Gerry Myton, Head of Indirect Tax said “We need to bring back life to town centres across the country. The retail sector has already asked for the government to introduce a ‘retail rates corrector’, which would see rates paid on retail properties fall by 20 per cent. To support the retail sector even further, the government should consider reducing the VAT rate to 18% for in-person sales but retain the 20% for online sales whilst significantly reducing the VAT registration threshold to address any loss in the total tax take.
“The government should also bring back tax-free shopping for overseas visitors. With high streets across the UK grappling with challenges, including decreased footfall and increased operating costs, this review is long overdue. Restoring tax-free shopping can unlock diverse revenue streams, from boosting hotel occupancy rates to increasing covers in restaurants and theatre ticket sales. The resulting turnover should translate to higher Corporation Tax and PAYE receipts making it a strategic imperative for the Chancellor.”
Cut VAT for the restaurant industry
Russell Nathan, Senior Partner said “Restaurants are running low on their cash reserves, and urgent action is needed. Given the rumours around an upcoming rise in the Employer National Insurance Charge, we urge the Chancellor to consider a 10% VAT reduction for the industry. Without intervention, we risk a surge in unemployment and heightened prices, exacerbating the cost-of-living crisis for all.”
Encourage investment in UK Equities
Russell Nathan, Senior Partner said “Investors have been shying away from UK equities following warnings that this month’s budget is going to be ‘painful’. This means that despite a slightly more buoyant summer, the market has become even worse since investors began fleeing after Brexit. Growth of the UK economy depends on investment in UK equities.
“Labour promised in their manifesto to restore stability, increase investment, and reform our economy, but without inward investment, this will become even more difficult. We urge the government to introduce measures to encourage investment funds to invest more in UK equities.”
National Insurance changes would hurt UK SMEs
Simon Michaels, Director of HW Fisher Business Solutions said “The UK government’s rumoured changes to National Insurance on pension contributions would be short-sighted, especially for small and medium-sized businesses. Due to increased costs to businesses, this could be a real issue for our economy, resulting in cash flow problems, reduced hiring, ripple effects on employee benefits, and a widening of the already unfair competition gap between large corporations and smaller firms.
“Instead of burdening small businesses, the government should offer relief or exemptions. These companies are the heart of our economy, and policies should be encouraging growth, not hindering it.”
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