Budget 2018 - Weightmans' View

Chancellor Philip Hammond delivered his final Budget before Brexit today (Monday, October 29), his second budget of the year.

Chancellor Philip Hammond delivered his final Budget before Brexit today (Monday, October 29), his second Autumn Budget since he abolished the Autumn Statement in 2016.

The Budget, presented in the House of Commons, sets out the Government’s economic plan for the country.

Haydn Rogan, Tax Partner at Weightmans has reviewed Budget 2018 and provides insight into some of the key points:

IR35 extension to the private sector

“Shifting the responsibility to assess the worker status of ‘self-employed’ contractors to businesses represents a significant compliance challenge, especially for firms that use agencies, or other intermediary organisations, to access labour.

“The online Check Employment Status for Tax (CEST) tool HMRC has rolled out for use by public sector bodies to establish the status of their contactors will need to be substantially modified and refined if it’s going to be suitable for the more nuanced employment models used by the private sector. 

“The lack of a statutory definition of ‘employment’ makes determining the tax status of contractors especially challenging. Unlike in the public sector, businesses are far more likely to depart from the online CEST tool and use their own bespoke testing procedures.

“This will be particularly true if an enterprise’s use of ‘self-employed’ contractors is an essential part of its business model. It might be the case that having to bring contractors on payroll results in other models being adopted.” 

Tax relief / incentives

“It was a welcome surprise to see the Chancellor announce a range of support for business, especially given the recent NHS funding promises made by the government and the proximity to Brexit. Increasing the annual investment allowance from £200,000 to £1m for two years, slashing the Apprenticeship Levy contribution for small companies and cutting rates for small businesses by a third over the next two years, will be welcomed by businesses operating in a challenging environment.”

Digital services tax  

“Taxing the digital economy is one of the biggest challenges facing The Treasury. The Chancellor’s reassurance that his plans for the UK to introduce a digital services tax from April 2020 are aimed at tackling the market’s biggest players, will be welcomed by growing e-commerce businesses concerned that this could have translated into a broader tax on online sales.
 
“From a practical point of view, putting the infrastructure in place to enforce such a measure without an agreed international framework will be a major challenge.”

Plastic packaging

“While it will undoubtedly prove unpopular in some circles, the government’s decision to introduce a new tax on the manufacture and import of plastic packaging which contains less than 30% recycled plastic is a low impact, relatively safe political measure to increase HMRC’s revenue without ruffling feathers as we enter what’s expected to be a particularly acrimonious political period.”

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