Brexit, Autumn Statement 2016 and corporation tax
The treasury set out its business tax roadmap in March 2016 with a clear commitment to continue on the path to creating a low tax environment to encourage entrepreneurship and investment in to the UK.
Notwithstanding the High Court Vote which may push back the Brexit timetable, following the Brexit vote in June this commitment needs to be reiterated and enforced particularly during an extended period of uncertainty.
Whilst the Brexit media rhetoric continues to be very negative, there are indications that sense will prevail with comments coming from senior figures in Nordic block countries and Ireland for example indicating their desire for the status quo, in terms of free trade and (in Irelands case) free movement, to remain in place. The UK is a hugely important market for the EU and all EU exporters to the UK are currently suffering following the fall in the £. This will feed through to their own economies impacting jobs and growth so continuity and stability around the UK exiting the EU will be sought from all sides.
My own view is that we will end up with a two tier EU. A political (and eventually monetary) union and separate trading union.
This should present the UK with a significant opportunity to maintain and enhance its position as the gateway to the EU in particular for territories that have not yet managed to negotiate a free trade deal with the EU. Whilst needing to be conscious of not being seen to introduce harmful tax practices from a fiscal perspective the UK will be free from issues such as EU state aid rules and, for example, having to comply with the proposed common consolidated corporation tax base regime.
So if I was chancellor for this budget I would commit to reducing the corporation tax rate by a further 2% to 15% by 2020, reintroduce the £500,000 per annum AIA limit for the remainder of this parliament (assuming it’s a full 5 year term) and increase the R&D tax credit for SME’s to 150%.
The residential property market whilst no doubt currently benefitting at the top end from the fall in the £ will be strangled by a tax regime which will eventually feed through to demand and liquidity in the market. This will impact on construction, jobs, growth and ultimately higher rents for people who will still not be able to get on the housing ladder. So I would also abolish both the additional SDLT rate for additional residential properties and the interest restriction rules and enable individuals to invest in residential property on a commercial basis through their pension funds.
If you would like further information on the topics discussed in the article please contact Chris Denning, speak to your local MHA MacIntyre Hudson advisor or send an enquiry.