As the dust settles on (yet) another Budget, the first for a new Goverment and a new Chancellor, what have we learned of what the future might hold?
This was always going to be a Budget in which spending would be slashed and taxes raised and, with regard to the latter, the hike in VAT is certainly a painful one. However, such draconian measures were expected.
The proposed reduction in corporation tax rates and the £5,000 NICs holiday for the first ten employees hired by new employers outside South East and Eastern regions certainly appear to be pro business but it’s the contents of the Treasury document entitled “Tax Policy Making: a new approach” which may contain the most cause for hope.
In this document it is acknowledged how unpredictable, complex and unstable the UK’s tax regime has become in recent years. In particular, it is recognised that the way in which the Government has looked to tackle tax avoidance has increased the complexity of the system and, by making frequent announcements with little or no warning, has contributed to the perception of instability.
The Government promotes, in its “new approach”, the idea of greater consultation and scrutiny with a view to ensuring that changes are both more considered and properly targeted. It also commits to making fewer piecemeal changes and to slow down the rate of change so as to increase the UK tax system’s reputation of stability.
These are, of course, noble aims and ones which others have promoted in the past but with little perceivable success. However, a new administration surely represents the best chance of implementing such changes. So if, while it cannot make the UK’s tax rates materially more enticing, the Coalition Government can focus its efforts on making the machinery of the UK’s tax system simpler and more predictable (and so more attractive), this will probably represent as good a result as we could hope for.