What effect will the election result have on UK taxes?
The large conservative majority will allow the new Government to move towards their first priority of getting the Brexit withdrawal agreement passed in Parliament.
Once approved, a transitional period of Duty and VAT free trading conditions will be in place until 31 December 2020, while a new trade deal is negotiated with the EU. However, what happens at the end of 2020 is unclear. Most commentators and industry specialists believe that reaching a Free Trade agreement, ratified by the World Trade Organisation, in less than a year is wishful thinking at best. If such an arrangement with the EU is not reached, an extension to a transitional period will need to be agreed to avoid the UK facing the same dilemma of crashing out in 2021.
Ensure your business is ready for Brexit
Many companies have already put plans in place to deal with the UK exit from Europe, the reality for day-to-day operations is not one that any business relishes.
Undoubtedly, a period of certainty that the new Tory government brings is most welcome and will give business more time to finalise their Brexit strategy. This would include plans for imports and exports; setting up an EU business establishment to deal with distribution and supply chains within Europe if necessary; registering for VAT in EU jurisdictions; and appointing human and capital resources.
UK businesses are already aware that they must obtain an EORI number through HMRC to continue importing from the EU post Brexit. However, given the complexities of international trade, careful preparation and the ability to grasp all the technical details involved with any new agreement will be essential.
With regard to other taxes; for the time being it will be business as usual. One to watch however, will certainly be Entrepreneurs’ Relief. The Tories’ manifesto commitment to “review and reform” entrepreneurs’ relief is likely be put into action. How swiftly this will be enacted is unclear, but any change is certain to take some time as a consultation will undoubtedly take place first.
Our departure from the EU will also cause a myriad of VAT changes which will be enacted towards the end of the transitional period.
Corporation tax cut scrapped
Since the election result the government has announced that they will not proceed with the planned reduction in the rate of corporation tax from 19% to 17% in April 2020.
It is rumoured that The Chancellor, Sajid Javid, will hold his Budget on 5 February 2020 where he will set out detailed spending and taxation plans for the year ahead. MHA Moore and Smalley will be holding post budget analysis events across the North West. If you would like to receive further details about the events please email firstname.lastname@example.org and ask to be added to our mailing list.
As events continue to unfold and further announcements are made, we will continue to bring you updates on tax matters that will affect you and your business.