With just over a week until the Spring Budget, members of the tax team at HW Fisher share their thoughts on what they think the Chancellor should be prioritising when it comes to UK tax policy.
Highlighting the need in the Budget for help for businesses to drive the economy, Toby Ryland, Corporate Tax Partner at HW Fisher says: “While most businesses will be hoping for a reduction in Corporation Tax, the chances of that happening are slim. It’s been less than a year since the Chancellor went forward with the move to increase the rate to 25%, and so businesses should pin their hopes on other changes that will help boost growth.
“This could include the extension of Business Asset Disposal Relief, which reduces the Capital Gains Tax rate on the sale of a trading company to 10%. As it stands, this only applies to the first £1m of capital gains, and it represents a lifetime limit rather than a per transaction limit. Before March 2020, the limit was £10m. If the Chancellor were to increase the limit back to this number, it could become more attractive for owners to sell their business and pass it onto the next generation.
“The Chancellor should also look at simplifying the Enterprise Investment Scheme tax relief. Designed to encourage investors to purchase shares in smaller higher-risk trading companies, this relief is a cornerstone of the UK’s business tax landscape, yet it is incredibly complicated and restrictive. In order for it to work more successfully and attract new investors, the process needs to be made easier.”
There’s a need for bold action in re-introducing VAT free shopping for tourists according to Gerry Myton, Head of Indirect Tax at HW Fisher says: “The Chancellor needs to take bold action in the upcoming Spring Statement by reinstating VAT-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, offsetting the loss of VAT and making it a strategic imperative for the Chancellor.”
And also there’s a need to provide a lifeline for hospitality by reducing VAT and cutting duties in the view of Russell Nathan, Senior Partner at HW Fisher as he comments: “Hospitality businesses are running low on their cash reserves, urgent action is needed. Given the upcoming rise in National Insurance, we urge the Chancellor to consider a VAT reduction and duty cuts to bolster the industry. Without intervention, we risk a surge in unemployment and heightened prices, exacerbating the cost-of-living crisis for all. Additional measures to offset National Insurance costs could include extending the alcohol duty freeze.”
