By Simon Vincent, Senior Tax Accountant at Hive Business.
If you saw or heard the Budget yesterday forgive me, I will try not to bore you to tears. At Hive we believe we have a duty to you, our dear reader, to report the salient facts about these national events, insofar as there are any.
This time around, a government with a weak majority and a Chancellor still suffering nightmares of his U-turn last spring have conspired to form a tepid piece of work; nothing seems to have impacted anyone, and there have been no movements in the markets.
So the material is bland, outlandishly bland. So very bland in fact that the most interesting headline is about something that hasn’t happened. But maybe that’s a good thing.
As a client remarked recently, “a government doesn’t have to be seen and heard all the bloody time”, and sometimes stability is worth more than change.
The thing that didn’t happen was VAT. There was talk a couple of weeks ago about the £85k threshold being dropped by half or more. There would have been a possible impact on facial aesthetics, which we were preparing for.
That it’s not happening seems like a good call — a lower VAT threshold would only have taken the competitive edge off smaller businesses.
The next ‘headline’ is that the Chancellor has removed stamp duty on the first £300k for first time buyers for properties worth up to £500k. I find it difficult to see what this will achieve.
If you were spending £495k on your first home, would £5k of stamp duty really put you off? And if you have that kind of cash, do taxpayers really need to be spending £5k on you?
As if to confirm that the policy won’t help poorer people but will help existing owners, the Office for Budget Responsibility said it expects house prices to rise by 0.3% as a result.
This brings us onto the topic of new builds, which Philip Hammond was doing some posturing on. He said he was going to help councils push through building projects against people who acquire planning permission but don’t build.
He stopped short of saying anything about making housing more affordable, but anyway, this was all rhetoric, nothing concrete yet.
There is some extra money for the NHS, but too little to make a difference. In response to some concern around changes to how contractors pay income tax, Hammond announced a public consultation on this, kicking the issue into the long grass for another couple of years. I wrote about this recently for Fine Words.
Hammond reiterated the government’s commitment to tax avoidance, but we don’t know what that will mean. He recently brought in rules to target tax planning schemes that use loans but what information we have about this new commitment suggests the government may now be out of ideas.
The detail behind Hammond’s statements yesterday will come in the December 1 finance bill, which describes the law and how it will be implemented. It remains to be seen whether anything else will be slipped in here out of the public eye.
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