New Government: Five tax and finance proposals accountants must watch
The campaigning is over, the votes are in and we now have a new Government.
So, what will the Conservative majority mean for accountants?
What are the likely changes for tax and business legislation that we can expect to see in the coming months?
We’ve taken a look at the key pledges from the party’s manifesto to highlight the proposals accountancy professionals may need to consider.
Here are five key proposals to watch out for:
1. R&D tax credit changes
This tax incentive enables firms to claim back some costs relating to research, development and innovation - either through a reduction in their Corporation Tax or as a cash lump sum. The Tories have said they plan to increase the rate to 13 per cent. They will also review the definition of R&D so that “important investments in cloud computing are also incentivised”.
2. Increasing National Insurance threshold
The Conservatives promised to raise this to £9,500 next year. Their eventual aim is to ensure the first £12,500 of earnings is completely tax free. The manifesto also contains a “promise not to raise the rates of income tax, National Insurance or VAT.”
3. Employment Allowance rise for SMEs
Employment Allowance currently means businesses and charities paying employers’ Class 1 National Insurance can get up to £3,000 a year off their National Insurance bills. The Tories have pledged to increase it by an unspecified amount for small firms.
4. Help for businesses
The Conservatives have pledged to carry out a number of reviews to help businesses, including for:
- Entrepreneur’s Relief
- Reducing business rates
- Better access to finance and credit for the self-employed
5. Crackdown on tax avoidance and evasion
The party has pledged to create a new anti-tax avoidance and evasion law to close loopholes that allow organisations and individuals to escape tax obligations. The measures to prevent this include:
- Doubling the maximum prison term to 14 years for the worst tax fraud
- Beefed-up Anti-Tax Evasion unit in HMRC
The Conservatives said during the campaign they would hold a new Budget in the first 100 days, so we are likely to see the proposals firmed up then.
The Tories have stated they intend to pass the Brexit Withdrawal Agreement before the end of January so that is likely to be the first major action taken by the new Government. If this happens, the transition period until the end of 2020 will kick in.
As always, IRIS will be monitoring any legislative changes extremely closely and we will continue to adapt and update our software to ensure you’re always compliant.
If you want to speak to our team about any tax or compliance matters and to see how we can assist you, then please call us on 0344 844 9644.