I spend every Budget Day in the same way. Initially, I’ll focus on the
headline items, and then comb the footnotes, hunting for the red tape hidden in
the nooks and crannies.
This time, however, my digging found something different: a pruning back of
onerous provisions. Here are some examples: plant and machinery pools worth
£1,000 or less can now be written off in a single year; the de minimis threshold
for non-domiciled individuals was doubled to £2,000; a new relief for trivial
pensions has been announced and there are to be simpler procedures for ISA and
Child Trust Fund administrators.
Business Note 35 even announced that certain anti-avoidance clauses will be
eliminated because they are ‘obsolete’, contradicting the belief that
anti-avoidance rules are left to wither on the tax vine, so people can puzzle
over their purpose, and worry lest innocent planning is accidentally damaged.
Another welcome surprise was the deferral of income shifting. If enacted,
these rules would have obliged family businesses to justify how profits were
distributed, a time-consuming process.
In short, these two short pages of legislation would have created a riot of
red tape. The Treasury’s willingness to listen to our comments, and then to
defer the decision, is a further indicator of a changed approach.
But experience of many Budgets has made me cynical. What about the
consultation papers lurking among the supplementary documents section of the
HMRC site? But instead of badly targeted avoidance provisions, there’s a low-key
discussion document entitled ‘simplification review: tax calculations and
returns for smaller companies’.
This Budget also delivered huge changes to the tax system: a radical
reshaping of the familiar capital allowances regime, root and branch reform of
capital gains and the taxation of non-doms and a shake-up of the penalty
provisions. It is in these major reforms that the real meat of this Budget is to
But as well as these substantive changes, already much commented on by
practitioners, this Budget had something different, a new flavour. The prunings,
the willingness to listen, the openness to regulatory reduction these may be
but straws in the wind, but it is a wind which is blowing in the right
Anne Redston is a visiting professor at King’s College,
London and a member of the ICAEW Tax Faculty’s Technical Committee
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