January 3, 2020
One substantial benefit of the sizeable parliamentary majority secured after the December 12 General Election is that we can move forward with a greater degree of certainty as to what we may expect in the coming weeks and months.
As professional advisors, much of our time in recent years has been spent hypothesising and guiding our clients towards possibilities – even likelihoods – but few certainties.
Providing there are no major upsets for Boris Johnson, it now seems all but guaranteed that the UK will leave the European Union by January 31. The form and manner in which Brexit will happen is still an open question, but many private clients and businesses on all sides of the political divide will welcome some sort of clarity; allowing them to finally be able to plan and move forward with investment, adjustment and growth.
We can safely assume that a Budget will arrive in the first quarter of 2020, though Brexit is likely to be its primary focus.
As a firm of tax advisors, the team at Lancaster Knox and I expect there to be relatively few announcements that will have a significant impact on our clients in terms of tax policy.
Having ‘shelved’ the proposed cut to the rate of Corporation Tax from 19 per cent to 17 per cent before the election, and with no increase expected to personal tax rates, any changes between the time of writing and publication would be unexpected.
We can, however, expect two areas of tax policy (among others) to be looked at in the new Parliament. The Office of Tax Simplification released its second report on the Inheritance Tax regime in Summer 2019, and it remains to be seen how many of the proposals, if any, will be acted upon. However, with Sajid Javid also having been seemingly open to the abolition of Inheritance Tax, it’s likely that a review of some form will appear in due course. The Conservative manifesto also promised a review of Entrepreneurs’ Relief – the reduced 10 per cent rate of tax for those selling businesses or business assets. We may therefore expect a consultation in due course to identify whether the relief remains appropriate in its current form. Is it likely to be scrapped? Only time will tell, but total abolition (at least, with no replacement) would seem counterintuitive based on the Government’s self-described ‘pro-business’ outlook.
Of course, the implications of this new political era extend beyond tax and will have an impact on all professional services and it’s even more important that advisors work collaboratively in their clients’ best interests as we move forward into a period of greater political certainty, which could last at least five years. Clients may now be motivated to begin or advance their planning, both personal and business, and want to know what they can do to put themselves in the best position for 2020 and beyond.
Whatever we or our clients’ political views, having a greater degree of certainty should be seen as a positive step forward for professional services. We can now seize the opportunity to be proactive, rather than reactive, and move into 2020 with renewed energy and vigour.
James Heathcote works across Yorkshire and the North East with clients and advisors on all personal tax and family business consulting matters. Contact him on firstname.lastname@example.org or 01904 861636
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