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What could the Halloween Budget have in store?

Article posted: 19th October 2018

With a Halloween Budget just around the corner, we have sourced a crystal ball and have tuned in to the whispers in the Westminster corridors.

Green taxes:

Speculation is rife that the Chancellor will hike the tax that firms currently pay on gas in a bid to get them to go green and to raise a potential £500 million a year for the Government.

It is said that the Chancellor wants to raise the Climate Change Levy (CCL) that businesses currently pay on their gas in order to match the same rate of tax currently set for electricity. Electricity is currently charged at 0.847p per kwh, nearly double that of gas at 0.339p per kwh. So the planned rise is quite a hike!

This seems unfair to business at a time when uncertainty over Brexit has meant a general weariness of investing in new technologies. Perhaps the Chancellor could think about incentivising energy saving within businesses by taking plant and machinery out of business rate evaluations thereby encouraging investment in greener energy and more efficient methodologies.

Red Taxes:

The Chancellor may be tempted to take the next step towards ending red diesel access for transport refrigeration, thereby encouraging a shift towards zero emission technologies and help boost Britain’s air quality

VAT raid on school fees?

Parents with children in independent schools may be faced with a 20% eye-watering rise in costs as the Chancellor focuses on whether to levy VAT on school fees.

Contractors and IR35

The forthcoming Budget could include proposals that will significantly change how the rules of IR35 should be applied.

It is already the case that public sector bodies who hire workers via personal service companies are required to determine whether those workers are in effect employees. Whilst this change has reportedly caused difficulty and resulted in public bodies suffering shortages of key skills, HMRC has estimated the move has raised £410m in extra taxes since 2016.

It is said that the Chancellor’s Budget speech could see him announce a similar reform of the rules to be applied to private sector businesses. This will mean the onus will be on those who engage workers via personal service companies to satisfy themselves that the worker would be classed as self-employed if engaged directly. If not, the business will have to treat the worker as an employee and tax them accordingly, including a need a need to account for employer’s National Insurance Contributions.

Our blog entitled 'Will the forthcoming Budget tighten IR35 rules?' looks at this.

VAT raid on small businesses?

Lots of commentators are asking if the Chancellor will halve the current threshold for businesses having to charge VAT from £85k to £45k of turnover a year.

Pensions:

It is generally felt that pensions will come under scrutiny too in the Budget with many asking whether the Chancellor will cut the tax favoured annual allowance or lower the rate of relief… or both?

Only time will tell if the above is hokum or a collection of spookily accurate predictions!

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