Industry professionals have commented on the tax changes including yesterday’s (13/03/2018) publication of the consultation on CGT Entrepreneurs’ Relief, following Chancellor Phillip Hammond’s 2018 Spring Statement, with Camilla Wallace, partner and head of the private client group at law firm, Wedlake Bell, describing the CGT Relief as “important” to trustees and beneficiaries of trusts that hold qualifying shares.
At the same time, Ms Wallace, also said the relief was “disappointing” as the rules will not be applied until 6 April 2019 and altohough "this proposed new facility will help prevent the potential barrier to grow under the current rules", it “will not help those looking to realise their investment in the meantime, but being at consultation stage, there is an opportunity to respond and object, so movement is possible.”
Similarly, Nilesh Shah, chief executive at accounting, tax and advisory practice, Blick Rothenberg, said “the government could have been bolder to introduce the new rule with immediate effect.”
“The proposal is greatly welcomed and looks to protect the interests of entrepreneurs and founders of businesses, and further enhances this valuable relief in the UK’s personal tax regime,” he said.
“The current proposal is that only the gain up to the point the person makes the election will qualify for entrepreneurs’ relief, and the future increase in value will be taxed at the normal capital gains tax rate, which is currently 20 percent. There is an argument that the entire gain should qualify for entrepreneurs’ relief, and hopefully this important point will be considered carefully as part of the consultation process,” Mr Shah added.
Providing MPs with an update on the UK's economy, Mr Hammond revealed that the UK’s economy has grown since 2010, creating three million jobs with higher employment and wages up seven percent since inflation, but Lee Hamilton partner at Blick Rothenberg argued that “getting the balance right between labour market flexibility, workers’ rights and the taxation of off payroll workers will be essential to maintaining the growth in employment.”
“The outcome of the current consultation on defining employment status for tax and legal purposes (due to close on 1 June 2018) will be a key test for the government in this regard,” added Mr Hamilton.
In relation to the current Brexit negotiations, Mark Abbs, a partner and head of global mobility tax services at, Blick Rothenberg was disappointed "that free from the usual detailed changes in Budgets, the Chancellor missed a perfect opportunity to set out a clear road map on how the UK will use tax policy to help with the UK’s competitiveness post Brexit.”
Tax partner at Crowe Clark Whitehill, Richard Bull, added that Mr Hammond had missed an opportunity to introduce tax changes ahead of Brexit, noting that “if the UK economy stalls or growth falls short of expectations, the Chancellor’s ability to defer tax increases will be eroded.”
He added: “Given the trend of late to avoid any outright increase of tax rates, we may face more scrutiny on valuable reliefs in an effort to plug any shortfall. The impact of fiscal drag is also likely to remain, particularly for inheritance tax.”
George Bull, senior tax partner at audit, tax and advisory firm RSM agreed, adding that many had hoped “that the Chancellor would use the opportunity to set out a tax road map for the UK after Brexit, it is clear that the Chancellor is very willing to consult, to listen, and to test ideas before deciding which ones to implement and how.”
The Chancellor rounded up the 2018 Spring Statement with a positive overview of the UK’s economy with OBR figures showing the economy had grown by 1.7 percent in 2017 compared to the 1.5 percent forecast in the Budget.
On this note Mr Hammond said: “Forecasts are there to be beaten and not a single penny of the tax payer’s money will be wasted.”
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