Autumn Budget: 4 things to watch out for

With Philip Hammond set to announce the 2017 Autumn Budget, here’s our verdict on whether these four hot topics will be addressed by the chancellor.

1. The gig economy

Earlier this month, the Work and Pensions Committee, and Business, Energy and Industrial Strategy Committee published a joined report on the gig economy, calling for greater clarity around the definitions of employment status, and closure of tax loopholes exploited by some businesses.

Back in July, the Taylor Review tackled how current regulations could be adapted to reflect an emerging gig economy, including how to address the “£60bn elephant in the room” – national insurance contributions avoided by employers that use flexible workers rather than hiring employees.

Will Hammond take the plunge and act on some of the Taylor Review recommendations?

The verdict: It’s likely to be a case of once bitten, twice shy. After the U-turn on class 4 national insurance contributions following the Spring Budget in March, Hammond will be looking to avoid a similar situation at all costs. However, while we don’t expect concrete changes to be announced by the chancellor, it’s likely that he will address the review and pledge to carry out further consultation on the gig economy.

2. VAT shake-up post-Brexit

Ensuring that the UK remains competitive post-Brexit is likely to be a discussion point in the Budget, but can the chancellor really make any commitments when negotiations with the EU are at such early stage?

The verdict: The Office of Tax Simplification recently released recommendations for reforming the VAT system, recommending a review into reducing the VAT registration threshold. Brexit presents a good opportunity for VAT simplification, yet such a reduction would have administrative implications for many businesses, including bringing them into the scope of the government’s Making Tax Digital initiative, scheduled to begin for VAT purposes in April 2019.

Expect VAT to be mentioned, but Hammond will surely want further consultation before making any bold moves.  

3. Paradise Papers

The Paradise Papers exposed the tax planning structures used by companies and individuals to shelter wealth in offshore tax havens. With the chancellor squeezing often the most vulnerable in UK society as well as those on low incomes to reduce the deficit, Hammond will under pressure to push back against tax avoidance by the wealthy.

The verdict: All talk but no action. Hammond might present a tough stance by backing the government to tighten its approach on multinational tax avoidance and increase efforts to crack down on perceived individual tax evaders, but it’s unlikely he’ll reveal any concrete measures to do so.

4. Stamp duty

It’s been billed as a Budget to win back young voters, so could support for first-time buyers be on the cards?

Hammond has said that it is “not acceptable” that so many young individuals aren’t able to afford their own home, and the Budget is widely expected to contain measures to improve the UK’s housing situation by encouraging the building of new properties.

The verdict: If the Budget was to include anything tomorrow, it would relate to property. Eliminating stamp duty for first-time buyers would be a crowd-pleaser among young voters, potentially helping government plans to attract the youth vote. It’ll be a missed opportunity if stamp duty fails to make its way into the Budget.

Were we right? Find our by reading our Budget review.

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