Ahead of the Budget next week, Tim Walford-Fitzgerald and Toby Ryland, two of the partners at chartered accountants H W Fisher, have made several predictions about the possible tax reforms the Chancellor, Philip Hammond, may be considering introducing.


Tim Walford-Fitzgerald, private client partner, told IFA Magazine:


National Insurance

The biggest move in terms of personal taxation is likely to be around National Insurance. Having realised that abolishing Class 2 National Insurance for the self-employed would leave a lot of such people worse off, the Chancellor may well look at what he can do around Class 4 National Insurance.. Ultimately, it’s unlikely that he will want to lose much in the way of actual revenue. Given the significant backlash that surrounded the aborted plan to increase in Class 4 National Insurance rates last year, I suspect that the most likely move will be around a combination of the National Insurance thresholds and rates.

At present Class 2 National Insurance of £2.95 per week is payable only where business profits exceed the small profits threshold of £6,205. Class 4 National Insurance of 9% applies to annual profit between £8,424 and £46,350. It’s possible the Chancellor will raise the threshold to say something in the region of £9,400 rising to £10,200 by the end of the Parliament, while at the same time announcing a steady annual 1% per year increase in National Insurance Class 4 contributions to 12% over the same period.


In addition to this the Chancellor has to find a way to fund the £20 billion additional funding for the National Health Service (NHS) that has already been announced. While it is far from certain he will do this one possible way to fund this additional spending is by increasing the additional National Insurance charge on earnings or profit paid by both the employed and self employed above £46,350 from 2% to 3% (this top rate reportedly introduced to help fund the NHS). On its own this may not be enough but given the Chancellor doesn’t appear to be ruling out tax rises –  the rumoured cut to income tax/hike in personal allowances has also apparently been scrapped – so hiking the top rate of National Insurance by 1% may go some of the way to providing him with the funds he needs.

Foreign ownership of residential property

Under the current taxation rules foreign owners of residential property must pay a surcharge of 3% above Stamp Duty Land Tax for additional properties, 20% income tax on any profits from rent, although this can be as much as 40% depending on their income and 28% Capital Gains Tax if they dispose of the asset. The recent announcement from the Prime Minister suggesting an additional surcharge seems to suggest an additional surcharge of 3% Stamp Duty Land Tax on top of the current 3% surcharge – so ultimately a surcharge of 6% on foreign residential property investors. Whether this will put off inward investment, slowdown house price growth in the capital even further or simply mean foreign investors will use companies or other special purpose vehicles  to invest in UK residential property in London and other cities in even greater number than they do already is harder to determine.



Toby Ryland, Corporate Tax partner, said:

Corporation Tax


One area where the Chancellor could take significant action is Corporation Tax. While Corporation Tax is due to fall to 17% by 2020. The Chancellor could reduce Corporation Tax further, to as little as 12.5% particularly if the chances of Britain crashing out of the European Union without a deal look greater than the chances of securing a deal. While I would place only 50% likelihood of this happening it’s entirely possible the Chancellor might announce a further cut to Corporation Tax to 15% by the end of this Parliament.

There are problems with Corporation Tax in that despite the headline rate falling over the years the restrictions on corporate write offs have increased so that the cuts have been balanced by restrictions to the such an extent that it’s a bit of a zero sum game. It’s unlikely that much may change in this regard. Even if Corporation Tax were to be cut to 12.5% or 15% the likelihood would be that what companies can write off as losses would be reduced in order that the Treasury ultimately still collects the same amount of revenue.

Business Rates


While there is little doubt many retailers would love the Chancellor to take more action in terms of providing further Business Rates relief this seems unlikely. Firstly, local authorities are desperately short of cash and any further reductions in what they are able to collect is likely to heap further pressure on locally delivered services. Equally calls for a so-called Amazon Tax are likely to fall on deaf ears. This is not so much about the Chancellor’s lack of willingness to act on such issues as it is an inability to do so.

An Amazon Tax, or Wharehouse Tax could have unintended consequence with the tax burden falling on much smaller businesses rather than the likes of Amazon themselves. Part of the problem here lies in the fact that while Amazon has warehouses in the UK they don’t count as “permanent establishments” for Treaty purposes, so Amazone can be based in Luxemburg, can have a distribution centre in the UK but still escape UK tax. It is possible the Chancellor could announced a review of tax treaties to bring them more up to date with modern business practices. But it seems very unlikely we’ll see anything elses in terms of any major announcements outside of that.



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