A&M Tax Advisor Update

The Budget 2018: What You Need to Know

Marvin Rust, Head of A&M Taxand Europe


Richard Syratt, Managing Director


Jonathan Hornby, Managing Director


Mairéad Warren de Búrca, Managing Director


Ian Fleming, Managing Director


Dafydd Williams, Managing Director


Keith Thomas, Managing Director

October 29, 2018 / Europe

The Chancellor told us today that the era of austerity is “finally coming to an end” – note the careful language; not “over”. 

The detailed Budget notes strongly emphasise the need for a “fair” tax system. Whilst one can see what the Chancellor is trying to achieve, the missing piece of the puzzle is the transformation to a simpler tax system that encourages international businesses to locate here other than by virtue of the low corporate tax rate. With a tax code already longer than the US, we are alas the global champions in having the most complex tax system in the world. This has a significant impact on the cost of doing business, a cost which shouldn’t be underestimated.

For example, we are back to Industrial Buildings Allowances (IBAs) reinstated for the 21st century and at 2 per cent per year, rather than the 4 per cent of old. But at the same time, relief on special rate spend has dropped from 8 per cent to 6 per cent. The Annual Investment Allowance (AIA) is also increased but only temporarily.

Much will be said about the new digital tax – however the forecast tax raise in 2020/21 is estimated at only £275 million – it sounds like a lot but doesn’t even scratch the surface when compared to the £60 billion the government raises through corporate taxation. Was this worth the UK taking a position ahead of the rest of the world at a time when we will be leaving the EU?
The business tax world of tomorrow is more complex than it was yesterday. This continues a trend over the last few years. It may be good for tax advisers but it is not so great for the UK economy.

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