On 25 November 2015 the UK Chancellor of the Exchequer is to announce fiscal measures for 2016/17 in the annual Autumn Statement. The proposals will be formulated against a backdrop of lower tax receipts and higher borrowing than expected, and the need to introduce measures to soften the cuts to tax credits for lower paid workers and families.
Small businesses are calling for a reform of the system of business rates, the local taxation based on property. There could also be an announcement in the Autumn Statement in connection with the devolution of powers to local authorities on control of business rates. This local taxation is a concern especially for some types of small business such as those in the retail sector which consider that the rates need to take into consideration the size of the business and the ability to pay. There are also calls for more transparency in how the business rates are computed. The British Retail Consortium recently estimated that 80,000 shops could close by 2017 owing to the burden of business rates.
Small and medium enterprises (SMEs) are suffering from a skills gap but are unable to create the number of apprenticeships deemed necessary to fill this gap. The costs and time needed to train staff are seen as an obstacle to taking on apprentices and SMEs are looking for further incentives from the government to train staff.
There may be further announcements on pensions, although details of proposals may be left until the 2016 budget announcements. There is some anticipation that the Chancellor may announce a pension that works along the same lines as the Individual Savings Account (ISA) with tax exemption for income arising on funds in the account.
More funds may have to be raised from another source to fund any relief introduced for the tax credit cuts. One possibility could be a restriction in the capital gains tax relief on the sale of expensive homes. Another area the Chancellor could look at to raise further funds is renewable energy, where there may be some scope to reduce grants and tax relief. It has also been reported that the Chancellor could announce a rise in fuel taxes in respect of diesel, especially following recent scandals over measurement of emissions. In addition to a rise in diesel duty there could be higher Vehicle Excise Duty rates.
Following the approval of the OECD’s recommendations on base erosion and profit shifting (BEPS) and the planned introduction of country by country reporting the Chancellor is likely to make further references to combating tax avoidance and evasion. Any move to ensure that large companies pay the correct amount of tax would receive wide public support in the UK in addition to helping the government finances.
There could also be further measures to combat the use of personal service companies to avoid tax. New rules may make it compulsory for consultants to be placed on the payroll of a company and be taxed as employees if their work for the company continues for more than one month. This would ensure that the employer became liable to employers’ national insurance contributions in relation to the consultant.
