Ahead of next week’s shenanigans, the chancellor has been busy, with many speeches at venues as disparate as GCHQ and Imperial College London’s White City campus. My colleagues and I set out some of our predictions as to what we may expect on the tax front.
But what about the bigger tax picture? To be honest, most people would like a break from the ceaseless flood of tax changes we have seen over recent years. But with so many consultations yet to produce specific HMRC proposals, with a promise of more anti-avoidance and anti-evasion legislation and with both Europe and the OECD prompting changes to the UK tax regime, that’s a vain hope.
We’ve also seen the chancellor’s growing love of white rabbits – grand gestures that respond to the mood of the moment. Pensions liberalisation and the national living wage are but two recent examples of this.
We can expect to see the Chancellor trying to dig his way out of the hole he has got into over tax credits.
There’s also a moral obligation on the chancellor to urgently set out his “direction of travel” in two key areas:
Pensions. While we know that the government won’t be setting out any detail until spring 2016, hard-working families urgently need to know whether the minimum age for liberalisation will rise, and whether ISA-style pensions will be introduced. This has ceased to be a political issue: real people need to make real decisions affecting the remainder of their lives.
Renewable energy. The grants and tax reliefs associated with renewable energy seemed settled as recently as March 2015. However, the last eight months have seen one change after another. With many concerned that the government’s green credentials are now in tatters, rumours of further changes to be introduced by DECC only serve to undermine an already uncertain situation. In the interests of certainty and clarity, we call on the chancellor to set out his direction of travel for renewable energy tax reliefs and grants.
Pulling those threads together, we can expect to see the chancellor trying to dig his way out of the hole he has got into over tax credits, perhaps providing a measure of financial relief for those who might have been affected by his original proposals but without sacrificing what he sees as the spirit and purpose of the changes. Will that come through lessening the impact of tax credit changes while making up the difference through cuts in housing benefit? Possibly. But equally, we might see an announcement which reminds us of a government message that we haven’t heard much about recently: “we are all in this together”. What might this look like? Possibly, reductions in the tax credit changes offset by a restriction in the capital gains tax relief on the sale of the most expensive homes. That would be politically well received, redistributive in its effect and of considerable benefit to the Exchequer.
This brings us to the chancellor’s chosen venues for recent speeches. George Osborne made much of his choice of the Imperial College venue, rooting for world-beating science and innovation as representing the future of the UK economy. With the patent box tax regime having run into trouble in Europe, perhaps this Budget (sorry – Autumn Statement) will bring forward new proposals to stimulate research and development, and the creation of intellectual property generally.
Then there is GCHQ. An interesting choice of venue and one which the chancellor used to remind us all of the cyber-security and broader terrorists threats faced by the UK, its businesses and individuals. With companies having to face up to need to invest in cyber-security, perhaps the chancellor will provide assistance in the form of enhanced tax allowances on such expenditure, to encourage them to do so.
For now, the final content of the Autumn Statement is anybody’s guess. But on 25th November RSM’s team of experts will be on hand to analyse every last detail of the chancellor’s proposals.
George Bull is senior tax partner at RSM