Stephen Poole, Senior Tax Consultant from accountancy practice Robson Laidler
Times are turbulent with divisive popular votes on both sides of the Atlantic and a recovery that does not seem to have spread out of the south east. The country is facing exchange rate fluctuations, which are putting pressure on the prices of everyday goods, and when combined with poor wage growth for ordinary people over the last decade we have a potentially explosive mixture.
Meanwhile Philip Hammond has taken over from George Osborne and the Autumn Statement next Wednesday (23rd November) will be his first major speech on fiscal policy, and an opportunity to announce strategic initiatives.
What do we know about Philip Hammond? Well he spent time in Transport, Defence and Foreign Affairs. Prior that I think it fair to say that Hammond was one of the architects of the Conservative Party’s austere, business facing approach to public spending. He has had business interests in house building, property, manufacturing, healthcare and oil and gas.
With this in mind it is worth looking back at Theresa May’s acceptance speech and I think it is worth quoting this part:
‘The Government I lead will be driven, not by the interests of the privileged few, but by yours. We will do everything we can to give you more control over your lives. When we take the big calls, we’ll think not of the powerful, but you. When we pass new laws, we’ll listen not to the mighty, but to you. When it comes to taxes, we’ll prioritise not the wealthy, but you. When it comes to opportunity, we won’t entrench the advantages of the fortunate few, we will do everything we can to help anybody, whatever your background, to go as far as your talents will take you’
There is pressure to keep major fiscal announcements to a single Budget, and with the many objective uncertainties Hammond will probably want to keep his options open for now, thus giving some breathing space until the Budget next Spring. Therefore I don’t expect income tax rate changes or large increases in income tax bands. However he may use the Statement to put down some markers, and increase his political profile. My personal predictions are:
- Some soothing words for the markets with some guidance on future interest rate expectations and a comment on progress on trade agreement plans
- A return to Osborne’s Northern Powerhouse ideas, hopefully with some meat on the bone
- With a view to the fairness agenda he may scrap the reduction in capital gains tax rates that Osborne give away in his last budget. Indeed he may go further with this
- Some hard sounding words on tax avoidance, but there is already a lot of new legislation and consultation in this area. I think he will concentrate on the already open topic of punishing tax agents
- While Hammond will probably say this is little scope for tax cuts, a small tax break may be offered to the long suffering people on low pay, probably a reduction in fuel taxes or a minor increase in the Personal Allowance, or NIC thresholds
- A new initiative for small businesses, with maybe some tinkering around with EIS or SEIS, possibly a new investment vehicle
- A restatement of the digital agenda maybe with a relaxation of timescales
- Finally, with Hammond’s background in house building I think we may see a relaxation in the new property financing rules, possibly accompanied by a further attack on enveloped property.