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2019: The year the Budget went missing

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    James Martini

    James Martini UKBF Ace Staff Member

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    It’s been a turbulent few years in British politics, none more so than 2019 which looks likely to be the first calendar year in which no Budget speech has been made since 1768. 

    For anyone who likes a stat or two - the electorate is set for the first December Election since 1923, while Sajid Javid could become the first Chancellor not to deliver a Budget speech in almost 50 years. 

    Usually, for at least one day a year, the Budget takes centre stage as the Chancellor maps out the country’s fiscal policy for the forthcoming tax year which gets under way on 6 April. 

    Employers wait to learn how much extra they will have to pay to cover increases to the national living wage, buy-to-let landlords are braced for further tax measures cracking down on their profits, and bricks-and-mortar retailers pray for a level playing field to compete with online firms. 

    With all eyes on Brexit, those with an interest in fiscal policy are left scratching their heads: could this be the first year without any Budget at all? Will changes passed into law in the Finance Act (2019) and set to commence in April 2020 actually happen?

    Corporation tax

    Anyone involved with a limited company will be keeping an eye out for changes to the rate of corporation tax.

    This levy, which netted the Treasury £55.1 billion last year, is currently deducted at 19% from any trading company’s profits and is due to reduce to 17% from 1 April 2020. 

    Whether or not that comes to fruition after a year of extreme political upheaval remains to be seen. The Green Party, for example, plan to raise corporation tax to 24%, while Labour have a figure of 26% in mind. 

    If a shadow chancellor takes hold of the red briefcase before Christmas, the prospect of abolishing the planned reduction and rushing through a significant increase to this tax in the new year seems possible.

    Given they face a race against time, it's more likely that this reduction may only last a year before the new government can raise the tax rate significantly. 

    Increases to the living wage

    The national living wage increase is almost as certain as Christmas falling on a Wednesday in 2019, but how much it will increase by has resulted in business groups voicing concerns. 

    There's cross-party support to end the UK’s culture of low pay, and with Javid intending to raise the living wage for over-25s to £10.50 by 2024, it’s easy to see why business groups are circling the wagons. 

    “Businesses already face significant cumulative employment costs, including auto-enrolment, the immigration skills charge and the apprenticeship levy,” said Adam Marshall, director-general at the British Chambers of Commerce.

    “Action must be taken to alleviate the heavy cost-burden facing firms or risk denting productivity and competitiveness.”

    Business rates

    Marshall may well have been talking about focusing on the business rates system in England and Wales when referring to the “heavy cost-burden”. 

    High street retailers have consistently reported that this business property tax leaves them struggling to compete with online rivals that are not liable to pay business rates. 

    A Treasury Committee recently echoed business groups’ calls for reform, saying that “odd [tax] reliefs are nothing more than sticking plasters to a [business rates] system in urgent need of reform”. 

    Entrepreneurs’ relief

    The Institute for Fiscal Studies claimed last month that entrepreneurs’ relief costs £2.4bn a year in lost income, prompting fears this valuable tax break could be scrapped by a new government - whoever that may be.

    The policy reduces the rate of capital gains tax on disposals of shares in all or part of a business from 20% to 10% and up to £10 million of the relief can be claimed by an individual. 

    Javid’s predecessor, Philip Hammond, tightened the rules around this policy in Budget 2018 last October, while Labour would probably scrap it altogether. 

    Should the new government abolish this policy, business owners who sell up before 5 April 2020 will need to claim entrepreneurs’ relief by 31 January 2022 or risk a substantially higher tax bill. 

    It’s never been harder to predict the twists and turns of politics but the earliest a Budget is likely to happen is January 2020, even if Parliament’s Christmas recess is shorter than usual, as has been mooted. And after the year of the missing Budget, it seems likely there will be at least two in 2020.