Michelle Quest, Head of Tax at KPMG in the UK, comments on the business tax measures announced in the Autumn Statement.
Commenting on the business tax measures announced in today’s Autumn Statement, Michelle Quest, Head of Tax at KPMG in the UK, said:
“In a hugely uncertain environment, the Chancellor has clearly endeavoured to provide some certainty and stability. ‘Steady as she goes’ seems to be the message Philip Hammond was giving when he stood up in the Commons today: committing to the business tax roadmap announced at the March Budget, business rate reform, and maintaining the ambition of reducing headline corporation tax rate to 17% by 2020.
“Whilst some will be disappointed that the Government is going ahead with restrictions on interest relief and losses, which particularly disadvantages multinationals, it’s also clear the Chancellor is listening to business. With just one major fiscal event to contend with each year, companies will get fewer changes to handle, creating a more stable environment. What’s more, by moving the Budget to the autumn this will give all taxpayers more time to come to terms with announcements before they come into force in April.
“The most significant tax change the Chancellor revealed today was the rise in Insurance Premium Tax (IPT). While the Chancellor made no direct link, looking at numbers, it would appear as if the rise in IPT is funding the fuel duty freeze. In any case, this is the single largest tax increase announced and there were also hints we could see further increases in future years.
“In addition, the removal of some of the tax advantages relating to salary sacrifice also marks a major change. This will affect a large number of employers and employees who will see a rise in their tax bills.
“With no other major announcements revealed today, the Treasury seems to be taking a more measured approach; carefully considering responses to consultations and not rushing to decisions. This is certainly a welcome development.
“Looking further ahead, the Chancellor has evidently considered the need to maintain a sustainable tax base in a world where ways of working are evolving rapidly. In this vein, it looks as if the Government is exploring what sort of tax system can best support the modern economy in the medium term.”
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