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Where Taxpayers and Advisers Meet
Pound-Wise but Penny-Foolish? The Budget That Nearly Wasn’t
17/03/2020, by Lee Sharpe, Tax Articles - Budgets and Autumn Statements
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TaxationWeb’s Lee Sharpe picks over the tax implications of the 2020 Budget.

Introduction (NB Rates / Grant Figures Updated 18 March)

Credit where credit’s due, Mr. Sunak did rather well to deliver in 30 days even more wide-ranging a Budget than his predecessor(s?) had been trying to get across the line since October last year. Alas, we shall never know what “Hammo” or “The Saj” had planned. While important, tax was very much subordinated on the day – on the day, at least – to:

  • Dealing with the anticipated COVID-19 / Coronavirus outbreak at the national level – where the Chancellor forecast up to 20% of the working population could be absent at any given time, presumably due either directly to illness or to care requirements
  • A significant infrastructure-based spending plan (that has been on the cards since the General Election of December 2019)

Amongst other things, the word “austerity” was notable for its being completely absent from a rather long Budget speech. Likewise, it seems this new/old government now has very little time for “patient capital”. I saw no reference to “tax-motivated incorporations” either. I saw plenty of other stuff to dislike, however, including several issues that were all but glossed over.

I am no economist but am happy to take at face value the proposition that big-ticket capital infrastructure investment can reap rewards many times over. By and large the tax measures are much more modest in scope, if not in stupidity.


Key Announcements

Time To Pay – Mr. Sunak announced a dedicated helpline with 2,000 staff “standing ready to help” businesses experiencing tax payment problems specifically because of COVID-19 / Coronavirus:

Telephone: 0800 015 9559 (Monday to Friday, 8am to 8pm; Saturday, 8am to 4pm)

As an aside, there is now also an online facility for Self-Assessing taxpayers to pay by instalments, where the outstanding amount is less than £10,000.

The Budget Red Book goes on to say (1.102) that:

“HMRC have made a further 2,000 experienced call handlers available to support firms when needed. HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19.” (emphasis added)

I consider that to be a sensible and proactive approach, which prevents HMRC from having to deal independently with many thousands of reasonable excuse claims with its usual… entirely unwarranted aplomb. I am sure it occurs to readers that, given the virus’ expected reach, this measure could well apply to a very substantial proportion of businesses over the next few months – perhaps even longer. It may well be exploited. But there may well also be businesses who suffer because of their client’s or suppliers’ problems as a result of COVID-19 / Coronavirus, and don’t know it. It might well have been useful to include a blanket amnesty for delays of less than x days.

I am surprised at the reference to waiving interest, though, when HMRC’s own web page covering Time to Pay over COVID-19 / Coronavirus issues says “you have to pay interest if you pay late”. Some clarity or consistency (both, even?) would not go amiss.

Statutory Sick Pay (SSP):

  • Will cover employees unable to work because they have been told to self-isolate
  • - or they are caring for others in the same household who have been told to self-isolate
  • Discretion for employers not to require a “fit note” and a mechanism whereby NHS111 can issue a notification to the employee effectively to replace a “fit note”
  • SSP to be paid from day 1 of self-isolation rather than from day 4
  • Employers with fewer than 250 employees (as at 28 February 2020) will be able to reclaim their COVID-19 / Coronavirus-related SSP costs for 2 weeks per employee, once the relevant regulations come into force

For those ineligible to claim SSP:

  • ESA will be payable in appropriate circumstances from day 1 rather than day 8, for those directly affected or self-isolating according to Government advice
  • Universal Credit – people will be able to claim UC and advance payments where directly affected by COVID-19 / Coronavirus or self-isolating according to Government advice without needing to attend a Job Centre
  • The UC Minimum Income Floor will be temporarily relaxed to help offset self-employed claimants’ income losses, where directly affected by COVID-19 / Coronavirus or self-isolating according to Government advice

Business Rates - Updated to Incorporate Further Announcement 17 March 2020

  • Business Rates Retail Discount to be further increased to 100% for 2020/21 (all retail businesses)
  • Its scope to be increased to all leisure and hospitality sectors for 2020/21
  • Discount for ‘smaller’ pubs to be increased from £1,000 to £5,000 for 2020/21
  • £3,000 £10,000 cash grant to each business eligible for Small Business Rate Relief (i.e., rateable values up to £15,000 - most of these businesses would not have benefited from the further reductions in business rates mentioned above)
  • Further £25,000 grants to retail, hospitality and leisure busineses operating from smaller premises with a rateable value over £15,000 (SBRR) but below £51,000

The devolved nations’ mechanisms for Business Rate Relief are different, so these measures may not apply universally. There will also be a “fundamental review” of Business Rates, to report in the Autumn.

Entrepreneurs’ Reliefthe Lifetime Limit is reduced from £10million to just £1million for disposals made on or after 11 March 2020. This reduced Lifetime Limit will include ER claimed prior to 11 March 2020, so serial ER claimants may now already be blocked. Note that there are significant anti-forestalling measures so while, for example, ‘genuine’ commercial transactions that just happened to exchange prior to 11 March 2020 but had not completed by that time may not be caught, transactions implemented between connected parties or otherwise hoping to exploit the timing rule in TCGA 1992 s 28 may yet have the reduced Limit applied.

This must be one of stupidest changes to ER, in a relatively extensive catalogue of stupid changes to ER. The latest amendment to double the minimum qualifying holding period from 1 year to 2 years is not itself even a year old but here we are, yet again. It is difficult to see how limiting the relief to just £1million will preserve an incentive towards ‘genuine’ entrepreneurship, assuming that genuine entrepreneurs are serial business-creators. If the underlying premise of ER still stands, surely extending the minimum qualifying holding period was, and probably still is, a much better option? Perhaps even tied in with a broad requirement to re-invest? I could never understand why ER used to be available after only 1 year anyway, given that it was supposed to be a relief from capital gains.

Enterprise Management Incentive (EMI) Schemes – mentioned here because they are often closely linked to Entrepreneurs’ Relief, the Government seems still to like EMI – so much so, in fact, that it intends to review EMI to make sure it is working as intended and whether more companies should be able to access EMI Schemes (rather than acting as a precursor to its abolition, presumably).

Increase in NICs Starting Thresholds – Leaked in the run-up to the December 2019 General Election, the Government aspires to align the earnings thresholds for NICs with the Income Tax Personal Allowance. For now, that means a substantial increase to the Class 1 Primary Threshold and to the Class 4 Lower Profits Limit, to £9,500, which we picked up when the draft Statutory Instrument was published in February. As we noted at the time, the alignment between Primary Employee and Secondary Employers’ NIC thresholds has been broken, (the latter seems to have enjoyed only an inflationary increase) but it also appears that the Government has managed to resist the temptation to sneak in a revenue-raising uplift to the Upper Limits, above which the rate falls to just 2%.

Employment Allowance / NICs Holiday for Veterans – Employment Allowance will be further increased from £3,000 to £4,000 from 6 April 2020 – another General Election pledge. However, as per Budget 2018, from April 2020 it will be available subject to a maximum of £100,000 in secondary Class 1 Contributions (including associates) having been paid in the previous tax year. This is to ensure that the Allowance is available only to ‘smaller’ employers.

The Budget also confirmed the government’s intention to introduce an NICs holiday for veterans in their first year of civilian employment, but this time from April 2021. While there will be a consultation on the design of the relief, the intention is that employers will be exempt from any NICs for the first year, up to the Upper Earnings Limit.

Structures and Buildings Allowance – The straight line annual rate will increase from 2% to 3% from 1/6 April 2020, again making good on a Conservative election promise from last year. Where the business’ chargeable period straddles the operative date, then the 3% rate can be claimed on a pro rata basis.

Capital Allowances – More generally, the OOTLAR confirms that the Annual Investment Allowance will be reduced back down to £200,000 from 31 December 2020, as the temporary increase to £1million is withdrawn. As usual, businesses whose chargeable periods straddle that date will need to be particularly careful that they do not get caught out by the restrictions that apply to the sub-periods when there is a change in the Allowance. For more on Capital Allowances in relation to cars and vans, please see “Cars, Vans, Benefits and Fuel” below.

Pensions Annual Allowance Restriction for High-Income Individuals – The mostly good news for many people struggling with earnings sufficient to trigger a restriction of their pensions Annual Allowance is that, from 6 April 2020:

  • Threshold Income (broadly, income ignoring pension contributions) will be increased from £110,000 by £90,000 to £200,000
  • Adjusted Income (broadly, income including pension contributions) will be increased from £150,000 by £90,000 to £240,000, but
  • Minimum Tapered Annual Allowance will be reduced from £10,000 to just £4,000

Even before the COVID-19 / Coronavirus, the tapered Annual Allowance regime introduced from 6 April 2016 was causing serious problems for doctors, surgeons and other medical practitioners in the NHS Pension Schemes (among others) as they basically could do nothing to prevent an Annual Allowance tax charge arising on deemed contributions increases. It has been widely reported that the problem was so bad that many were refusing to take on more work, for fear of 

Increasing the bite point by £90,000 should mean that the Taper applies to a much smaller set of higher-earning individuals. The Taper effect will run on a bit longer, however, meaning broadly that some individuals ‘earning’ over £300,000 will get less tax relief on a smaller Annual Allowance than before. However, I am really struggling to see how the annual cost to the Exchequer will more than treble from 2020/21 to 2023/24 as per HMRC’s Tax Impact and Information Note (TIIN): very simply put, just how many more people does HMRC think would be joining the ranks of those ‘earning’ more than £150,000, over the next few years? Moreover, as RSM’s George Bull has previously observed, the Lifetime Limit already acts to restrict tax relief for cumulative pension contributions – what point does tapering the Annual Allowance actually server?

Corporation Tax – will stay at 19% rather than falling to 17% as promised in several previous Budgets since 2015 and 2016; however this makes good on a recent pledge made in the runup to the December 2019 General Election. It is forecast to retain an extra £7Billion+ per year for the Exchequer, from 2022. And here’s me thinking that (according to Conservative doctrine, at least), lower tax rates were supposed to result in higher tax yield, and vice versa... It takes minimal aptitude with a calculator to find that the Chancellor is being winsomely optimistic here: CT receipts in 2018/19 were £54Billion, according to HMRC figures, so foregoing a reduction of 2%/19% would equate to retaining £5.7Billion. The forecast increased annual yield of £7.5Billion by 2024/25 suggests that Mr. Sunak expects underlying CT receipts to increase by almost a third (32%) by 2024/25. Even if this projection were made before we stood at the precipice of another global economic meltdown, I’d have had my doubts.

Corporate Capital Loss Restriction will go ahead as planned, from 1 April 2020, to bring capital losses brought forwards into essentially the same regime – and the same annual Deductions Allowance – as Corporate income tax losses. However, the Government has relented since its Consultation Response, and the 50% restriction on capital losses will not now apply during the period of “official liquidation”.

Digital Services Tax – the new tax will apply at 2% of the revenue derived from the exploitation of UK users of social media, search engine or online marketplace functionality, provided by large Multi-National Entities (they know who they are) from 1 April 2020.

Research and Development – again, mostly from the Conservative party’s manifesto:

  • The Expenditure Credit or “Above-the-Line Credit” will be increased from 12% to 13% for expenditure incurred on or after 1 April 2020. This does not appear to have been mirrored in the SME payable tax credit that is paid in exchange for an eligible company’s qualifying “surrenderable loss”  
  • After having spent several years worrying that R&D takeup amongst SMEs was too low, the government has over the last couple of years become very concerned that it is becoming too high – that it is being abused. Measures to restrict the maximum payable tax credit to no more than 300% of the company’s total PAYE/NIC liability for a year were announced in Budget 2018 (and readers may well recall that the original 100% cap was removed only in FA 2012) and scheduled to start from April 2020; implementation has now been deferred until April 2021, and the Red Book hints at possible changes to the cap mechanism, in the interim
  • Finally, the government has again said it will consult on whether the scope of eligible R&D for tax credits purposes should be extended to cover data sciences/analytics and cloud computing

Corporate Intangibles – Again! – The Red Book announced yet more changes to the Corporate Intangibles regime, but this time apparently helpful. The Red Book and the TIIN both say that Corporate Intangibles acquired on or after 1 July 2020 will now be taxed or relieved under a single regime, which seems simple enough. Except that it isn’t.

By way of background, Assets acquired prior to 1 April 2002 are subject to corporate capital gains rules, so accounting adjustments such as amortisation are disallowed when taxing profits. For assets acquired on or after 1 April 2002, tax treatment generally follows the accounting treatment, and therefore amortisation is allowable. Acquisitions from related parties have been met with anti-avoidance rules to stop relief on old assets being claimed faster under the new regime. One might infer that this is what the latest change seeks soon to remove, but the TIIN confirms that “the tax treatment for pre-FA 2002 assets already within the charge to Corporation Tax prior to 1 July 2020 will be preserved” – in other words, will remain taxable under the old corporate capital gains rules. The new measure seems to be aimed only at assets acquired from related parties that were not already within the charge to Corporation Tax. Aside from potential manoeuvring within multi-nationals, I am struggling to work out why we should be grateful – particularly when the Corporate Intangibles and Entrepreneurs’ Relief regimes appear to be locked in a death-match to see which garners the most annoying amendments every year. Can they not just both lose and retire from the field?

Plastic Packaging Tax – From April 2022, the Government will impose a charge of £200 per tonne on plastic packaging produced in or imported into the UK, that does not contain at least 30% recycled plastic by weight. There will apparently be a de minimis of 10 tonnes of such packaging to ensure that small businesses are not disproportionately affected; also potentially exemption for certain medical packaging.

Third-Party Taxes in Insolvency – Another measure that raised more than a few eyebrows when announced at Budget 2018 was the proposed re-introduction of preferential creditor status for HMRC from 6 April 2020, although for now it will be limited so as to apply only to taxes that a business collects from other parties – e.g., PAYE/NIC, (primary deductions at least), VAT and Construction Industry Scheme retentions. Readers may recall that HMRC’s preferential status was deliberately removed almost 20 years ago because Crown preferential status was seen as anachronistic and unfair and, most importantly, harmful to business rescue and recovery, as it meant commercial lending was inherently more risky. This measure has been deferred until 1 December 2020, presumably so as to get Northern Ireland on board as well, rather than over any concern that the world’s standing on the brink of another global financial crisis might not be a good time to choke off commercial lending facilities. Note that there is no reference in this Budget to the related measure also announced at Budget 2018 to make individuals jointly and severally liable for corporate tax debt so presumably this new power, with retroactive reach that is potentially open to massive abuse by HMRC, will quietly go ahead from next month.

Home-Working Allowance – the flat rate allowance payable to employees to cover additional expenses when they are undertaking qualifying home-working arrangements will be increased from a maximum of £4 a week to £6 a week from April 2020. This is a significant increase but to a very modest sum; people having to self-isolate thanks to COVID-19 / Coronavirus may not be eligible a) because their precise circumstances may not qualify as “homeworking arrangements” and/or b) because they/their dependents may be too ill for actually working from home to be a realistic prospect (although I am not sure that there is strictly any minimum amount of work required).

Cars, Vans, Benefits and Fuel – From 6 April 2020:

  • Van Benefit Charge £3,490
  • Van Fuel Benefit Charge £666
  • Car Fuel Benefit Multiplier £24,500

Following the introduction of the new “Worldwide Harmonised Light Vehicles Test Procedure”, many car models’ formal declared CO2 emissions have increased when compared to the previous “New European Driving Cycle” emissions test results.  Cars first registered on or after 6 April 2020 will therefore be subject to a new table of emissions multipliers for car benefit calculation purposes, which aims broadly to ‘smooth’ the transition by reducing the predecessor charge for the most part by 2% for 2020/21, by only 1% in 2021/22 and then returning to those original values in 2022/23 – see the HM Treasury Summary of Responses for further detail.

The Government will legislate in a future bill so that the van benefit for vehicles with zero CO2 emissions will be reduced to nil – but to apply from 6 April 2021.

Other than that, while the First Year Allowance for low-emissions vehicles, etc., will now extend beyond April 2021, the new thresholds will be very low:

For cars acquired or leased…

from April 2015

g CO2/km

from April 2018

g CO2/km

April 2021-2025

g CO2/km

100% FYA for brand new cars




Main rate (now 18%) new / used cars




Special rate (now 6%) new / used cars




Leased car >45 days: 15% disallowance





This reduction of the threshold for the main rate from a reasonable 110g/km to a frankly ridiculous target of 50g/km is expected to raise more than £100million per year in additional revenue to the Exchequer by 2024. With about a year to go, the choice of eligible vehicles between supermini and supercar is… limited. However, this is dwarfed by the next measure.

Red diesel will be largely ‘abolished’ from April 2022 except for use in certain sectors such as agriculture, rail and domestic heating. More simply, the government intends to extend the c60p+VAT duty on diesel fuel  that is for use predominantly in road vehicles, to pretty much every other use, except for rail, agriculture and non-commercial heating. The government has not yet made up its mind about commercial craft using inland waterways; (boats for personal use largely pay white diesel rates for propulsion and red diesel rates for any domestic use but the rules governing the fuel they physically use have become more complex); open water journeys will continue to be covered by Marine Voyages Relief. This measure is expected to raise more than £1.5Billion a year according to the Red Book, so expect venue costs (e.g., heating), construction costs (excavators, cranes, etc.) and delivery costs (refrigeration in transit) to rise.

VAT Measures

  • ePublications – Will be zero-rated from 1 December 2020, covering online publications of newspapers, books, magazines and academic journals. This follows the recent Upper Tribunal case of News Corp v HMRC [2019] UKUT 0404 (TCC), which found that the taxpayer was indeed entitled to zero-rate the digital supply through its website just as it could zero-rate its printed version; what is remarkable about this case is that, less than a month ago, HMRC issued a Brief that said it was going to take the case to the Court of Appeal and that any repayment claims submitted by businesses would be held over, pending that action. At the moment it seems that HMRC still intends to resist ‘historic’ claims until the law changes, but that may become difficult to justify.
  • Postponed Accounting – From 1 January 2021, importers will be able to deal with Import VAT through their VAT returns rather than having to account for Import VAT as a separate activity at the point of entry to the UK. This will be good for importers’ cashflow as they will no longer have to pay VAT on import and then reclaim it later through their VAT returns; (it will largely self-cancel on the VAT return instead); it will also simplify VAT administration (although customs and excise duties are still dealt with separately).
  • Women’s sanitary products – Will be zero-rated from 1 January 2021
  • Partial Exemption – The Government is still considering how best to respond to the contributions to its recent Call for Evidence on the simplification of the Partial Exemption and Capital Goods Schemes.
  • Reverse Charge on Construction - Still on course for a ! October 2020 start date, despite amounting to a collective punishment of hundreds of thousands of businesses for very modest saving to the Crown, relatively speaking.

Stamp Duty Land Tax – A 2% surcharge will be applied when non-residents acquire residential property in England and Northern Ireland, from 1 April 2021. The money thus raised is supposed to be earmarked to help reduce rough sleeping but apparently only in England.  

Top-Slicing Relief – The TSR rules have been ‘clarified’ with effect for life insurance policy gains made on or after 11 March 2020, to confirm that the Personal Allowance can be reinstated within the TSR calculation but that, so far as possible, reliefs and allowances should be given against other income instead of the TSR gain. This measure also follows a recent tax case – this time Silver v HMRC [2019] UKFTT 263 (TC) – which again found in the taxpayer’s favour.

Other Announcements – We Have Thoughts

Loan Charge – The Budget Red Book confirmed that the Loan Charge would proceed as set out following the Loan Charge Independent Review, which we covered in some detail in January. I will do no more than re-iterate that I find it difficult to support the “logic” which broadly finds that retrospective taxation (retroaction) is inherently a bad thing to be avoided, but that limiting the retrospection to some arbitrary point in 2010 is somehow OK.

IR35 3.0 – The roll-out to the private sector will apply from 6 April 2020. We see increasing evidence of blanket assessments being applied on a wholesale basis by large and medium-sized contractors but of course this is exactly what HMRC secretly wants. The irony is that the more contractors are wrongly categorised as employees, the higher will be PAYE receipts from April 2020, and HMRC will use this to justify the measure and to claim that PAYE had been artificially suppressed all along. So, it’s a win-win for HMRC, just so long as it can continue to look itself in the eye.

Making Tax Digital – The government has committed to publishing an evaluation of the implementation of Making Tax Digital for VAT. This is clearly in response to the recent joint CIOT/ATT survey, which was quite damning. Sometimes, when it walks like a duck, and it quacks like a duck, it really is a duck, and no amount of whitewash will hide the uncomfortable truths HMRC had already established it its own RTI review in 2017, as we pointed out in Making Tax Digital – The Truth is (Already) Out There. Expect plenty of bland statistics, big numbers but scant actual detail on how keeping digital records is supposed to have closed the tax gap.

Raising Standards in the Market for Tax Advice – “The government will publish a call for evidence in the spring on raising standards for tax advice. This will seek evidence about providers of tax advice, current standards upheld by tax advisers, and the effectiveness of the government’s efforts to support those standards, in order to give taxpayers more assurance that the advice they are receiving is reliable.”

I suspect I will not be alone in pointing out that some of the worst tax advice a taxpayer might ever have the misfortune to endure, is in fact provided by those already employed by said government. Whether it be howlingly-bad advice proffered by some telephone helpline script-kiddie who wouldn’t recognise tax legislation if a Yellow or Orange were dropped on their foot, or the internal failures resulting in tribunal cases where HMRC has acted “scandalously”, (Pokorowski), “egregiously” in making unsubstantiated allegations of fraud (First Choice) or has fundamentally failed in its strict duty of candour before the court (Jafari), HMRC has cultivated a serious deficiency in tax expertise, and it is the taxpayer who suffers in the end.

HMRC Promoter Strategy – “…HMRC will publish a new ambitious strategy for tackling the promoters of tax avoidance schemes… to drive those who promote tax avoidance schemes out of the market, …stop the spread of marketed tax avoidance, and deter taxpayers from taking up the schemes.”

Yet another example of HMRC wilfully colouring outside the lines like a naughty toddler on a sugar-fuelled power trip: if avoidance schemes do not work, then they should be defeated in the courts, and/or legislated against. If they do work, then HMRC should convince the government to change the law, rather than try to browbeat taxpayers into not availing themselves of tax reliefs to which they are legitimately entitled. I do not have a problem with HMRC combatting contrived / artificial tax schemes using the courts and legislation because both routes should theoretically ensure that HMRC’s approach is subject to independent scrutiny. I do have a serious problem with HMRC being allowed or even encouraged to bully taxpayers into applying legislation only in the way that HMRC would like - look no further than News Corp, Silver or Tooth for good reasons why.

Large Business Notification – From April 2021, large businesses will be required to notify HMRC when they adopt a tax position that HMRC is likely to challenge.  The mind boggles. Most businesses already have a policy of highlighting issues in their tax returns to avoid falling foul of HMRC’s very broad discovery powers but it appears that this is no longer sufficient. Affected businesses will be obliged to second-guess not only what HMRC is thinking about today, but what it might decide to take a dislike to several years hence.

Tax Guidance for Self-Employed People – The Government will apparently launch an interactive online guide for self-employed people.  I am struggling to understand why the Government wants to waste precious resources inventing something that the Low Incomes Tax Reform Group made years ago. LITRG’s comprehensive guidance for the self-employed might not be fancy-shmancy interactive but it is very, very good, composed by genuine experts and I think it will prove far superior to anything HMG might cobble together.

HMRC Automation – The Government will legislate to “confirm” that HMRC is allowed to use automated processes, to fulfil the role of an HMRC Officer as envisioned in current legislation. This is of course in response to a flurry of tax cases where HMRC has imposed penalties for failing to file tax returns, but been turned over by the tribunals because of a lack of human HMRC Officer involvement. While taxpayers initially enjoyed some success at the First-Tier Tribunal, CRC v Rogers and Shaw [2019] UKUT 0406 (TCC) found in favour of HMRC. However, the Government is leaving nothing to chance, and the legislation will act both prospectively and retrospectively, effectively to choke off any further legal action. Unless a higher court subsequently overturns the Upper Tribunals’ decision, the use of further legislation is broadly moot, but this is yet another example of the Government’s increasing appetite for retroactive / retrospective taxation to allow HMRC to get away with poor performance (the Loan Charge being just one further example).

Limited Liability Partnership Returns – The Government will legislate both prospectively and retrospectively, to “clarify” that HMRC is allowed to treat LLPs as general partnership for Income Tax purposes, in particular so that it can amend members’ tax returns where the LLP operates without a view to a profit. Wow, it really did not take long to stumble across yet another example of retrospective legislation.

What We Did Not See

Aligning NICs and Income Tax – I suspect that the Government’s aspiration to align the lower NI Starting Thresholds with the Income Tax Personal Allowance – while keeping the Upper Limits aligned with the Higher Rate Threshold – is a precursor to a more permanent fusion of NICs and Tax. Perhaps it was just too soon for Dr. Frankenstein to reveal his latest creation to the public.

High-Income Child Benefit Charge – Now that the Higher Rate Threshold has met the point at which Child Benefit starts to be clawed back, it is an absolute no-brainer that keeping them aligned from now on would be sensible, fairer and would increase the likelihood that taxpayers and even HMRC might remember and spot a potential clawback.

Loan Charge: Update on the Update – When I saw the following in the government’s response to the Independent Loan Charge Review:

“The government will ensure [that] people who entered into Disguised Remuneration avoidance schemes before 9 December 2010 will still pay the tax due and maker their contribution to funding public services. Further detail will be announced at the Budget.”

 - I perceived that the Government might try to re-introduce one of its more heinous proposals from its Consultation on the Reform of Close Company Loans to Participator Rules back in July 2013. I refrained from going into any detail so as not to tempt fate.


There is a kind of logic to the ordering of the above measures. There are some welcome developments to help businesses – Time to Pay, help with business rates, and easements for NICs. But the unending tinkering with Entrepreneurs’ Relief and Corporate Intangibles serves only to highlight the poor technical grasp of these regimes within government. And the changes to the Pensions Annual Allowance Taper for High Earners have been overdue since the Government was warned about the adverse implications back in 2012 (and they could do with going further).

The VAT measures appear to be useful, and the “clarification” of Top-Slicing Relief for Life Insurance Policy Gains is a sensible move. But how the Government has been conned into letting HMRC advance IR35 even further, when it has proven time and again so ineluctably incompetent in applying it in the past… I struggle to credit it. I also struggle with the argument that it is “only fair” for self-employed contractors to end up being responsible for Employers’ NICs, although I perceive some tax practitioners seem resigned to it as a placatory fudge. I think it depends on whether one buys into the idea that all contractors are former employees who set up their own companies in order to get out of paying NICs in the first place. I do not.

The new proposals for combatting tax avoidance – including “raising standards” amongst advisers – are potentially cause for concern: it will depend on how well defined are the measures and their aims, and whether HMRC can be relied upon to apply and observe them appropriately.

About The Author

Lee is TaxationWeb's Articles & News Editor and writes for TaxationWeb. He is a Chartered Tax Adviser with experience of advising individuals and owner-managed businesses over a broad spectrum of tax matters.
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