By Gary Mackley-Smith
What’s happened to the Budget? In all the Brexit confusion, this important annual tax event has gone missing.
The decision by Parliament to dissolve and have a General Election on 12 December 2019, the first December election since 1923, resulted in the proposed Budget on 6 November being cancelled.
The last Budget we had was on 29 October 2018 under Philip Hammond, which now seems a very long time ago.
There was a Spring Statement in March 2019, but that contained no tax announcements.
Draft clauses for the next Finance Bill were published in July 2019 for consultation by 5 September, and the government has yet to respond to the submissions made.
The general election will of course scupper all the plans that preceded it if there is a change of government.
The tax policies of the main political parties will become clearer once the election manifestos are published. We will summarise the key tax proposals.
The annual Budget sets tax rates and allowances ahead of the next tax year, so is an important event in the annual calendar. And as income tax is a temporary tax, it has to be reintroduced every year.
The lack of a Budget creates uncertainty for businesses who cannot plan for any tax changes in advance.
The earliest time for a Budget is now is likely to be January or February 2020.
There is a knock-on effect of a delayed Budget for Scotland, in that Scotland's Budget is scheduled for, ironically, 12 December. This will clearly need to be deferred, as Scotland cannot set its own Budget without first knowing what Westminster is doing.
A key measure that is meant to be included in the next Finance Bill, the draft clauses for which were published in July, is the off payroll working rules (IR35) for the private sector, which are meant to take effect from 6 April 2020.
These have already been in place for the public sector since 2017. Many professional bodies have called for the private sector extension to be delayed for a year due to the short time frame in which to adapt to the changes.
The new rules would mean that medium and large-sized businesses will have to assess the employment status of any contractors they use where those contractors use their own personal service company.
If the business decides a contractor should be treated as an employee, it must deduct income tax and national insurance before paying the contractor.
Currently, contractors working through their own companies can decide their own status, so this is a major change, if it goes ahead.
If you would like to discuss your tax affairs and how they may be affected by the forthcoming general election, please contact a member of our tax team, or your usual Bishop Fleming advisor.