The Chancellor announced that the Budget for 2018 will be held on Monday 29 October, not the usual Wednesday. It's a Monday for the most obvious reason – the Wednesday is Halloween so Thursday's newspapers would be filled with all manner of horror derived headlines. Probably pictures of the Chancellor as Count Dracula and mentions of sucking the lifeblood from businesses or pensioners or the self-employed (or all three!), depending on which paper you read. There might even have been a headline about being "grabbed by the Ghoulies"… What am I saying? Of course there would be such a headline! The Brexit discussions may also have had an impact on the timing. Possibly.
But enough of all that. This article is supposed to be a short one based on some predictions for the Budget. They have been taken from readily available sources and a crystal ball, not due to some insider information – I wish I had those sorts of connections…
So, what are the predictions and some brief thoughts thereon?
VAT on public school fees – will parents be able to continue to afford paying for school fees after a 20% hike? Does this mean more children will be forced into state schools which are currently overcrowded and under financed already?
A basic rate tax increase on dividends – currently they are taxed at 7.5% but this may go up. A hike to 10% seems likely and this could correlate with…
A reduction in the dividend allowance to £1,000 – enough to mean many individuals aren't taxed on their small holdings of shares from former building societies but not much more.
Mandatory payrolling of benefits in kind so that P11Ds are no longer needed – could this also mean an end to Class 1A NIC on benefits and the start of Class 1 NIC, employers and employees, payments becoming due? A potential increase for employees may be on the cards.
Changes already implemented in the public sector for IR35 are coming to the private sector – if there is any doubt in the mind of the end client they will likely deduct PAYE from the payments made to the service company. This means that the monies received for a contract will be held in the service company but the employee will need to put this income on their tax return as they will receive a P60. What if this is the wrong position and the contract isn't caught by IR35?
Potential CGT reliefs for buy-to-let properties – an outside bet here to stimulate the property market.
Whilst the above are mere glimpses of a possible future it does not mean that they will come to pass. And with all the possible tricks in store will the Count Chancellor also deliver a few treats?
If you have any questions about the above, or your tax affairs, please contact Marc Dorsett on 01245 228146 or email@example.com who will be pleased to assist you.
This is not legal advice; it is intended to provide information of general interest about current legal issues.