What does the election result mean for you?

13th December, 2019

What does the election result mean for you?

As 2019 draws to a close and the dust begins to settle after the first December General Election since 1923, our Senior Management at WTT consider the implications of the Conservative Party’s win and what may lie ahead in the coming year.

Carla Roberts – Director of Legal Services

Following the Conservatives securing an overwhelming majority, their manifesto and campaign promises are now likely to be scrutinised closely. Whilst they have promised an “IR35 review” for their self-employed supporters, they never specified what that would entail. Also, it was conspicuously missing from their Manifesto.

The Chancellor of the Exchequer Sajid Javid, speaking on BBC Radio 4’s Money Box programme on 2 December said he wanted to ensure the proposed changes to the Off Payroll working rules were “right to take forward”.  But when will that review happen? A budget is scheduled for some time in the next 100 days which will take us far too close for comfort to the reforms which are due to be implemented in April.  

Furthermore, the Conservatives never said that they would delay the Off-Payroll Legislation and so the only likely way that would happen is if Brexit pushes it forward.

Therefore, end clients/agencies/contractors need to presume it is going ahead. If they haven’t already, they need to get their houses in order and prepare for what now looks like the inevitable. It may be just too late the stop the train that appears to be rushing full steam ahead into the station.

Thomas Wallace – Head of Tax

Given the Autumn budget was postponed for the election, we can now expect it take place in early 2020.  As ever, the various reliefs and allowances will be in the firing line, especially where they are perceived to be overly generous or being abused.

Speculation has grown in the last 6 months that the Government will look to abolish Entrepreneurs’ Relief and many analysts feel this is a real possibility. This valuable relief is believed to be no longer meeting its intended target, another example of legislation being changed after assent, due to it being used more widely that first predicted. In general, I do not anticipate many changes to CGT other than the annual increase in the annual exemption allowance. Similarly, the Conservative manifesto committed to keeping EIS/SEIS investment untouched and that should mean the investment limits and relief being unchanged.

In July 2019 The Office of Tax Simplification published its report into Inheritance Tax but I suspect it will not be top of the political agenda and a little too early to see any changes in the Brexit budget. Therefore, I do not think we will see any changes including the main residence nil rate band being increased to £175,000 from £150,000, as the final part of its tapered introduction.

Income tax rates will likely remain untouched but there may be a small increase in the Personal Allowance in the final tax year before it is linked to the Consumer Price Index in 2021/22.

The next budget will however be one to keep a close eye on, which we’ll be reporting on soon after the announcements.

Graham Webber – Director of Tax

What fate awaits the loan charge and its review now that the Conservative Party has an overall majority?

What fate awaits the loan charge and its review now that the Conservative Party has an overall majority?

It is widely accepted by most affected parties that the loan charge exists primarily to spare the blushes of HMRC which failed to use the information and tools they had at the time to take action against loan schemes. In particular, the APPG made it clear that the will of Parliament, reflecting the view of House of Commons and Lords committees, was that the loan charge was an inappropriate response. The review of that charge will report to the Chancellor soon. We should, therefore, expect a reaction after Christmas.

Our view of the outcome, in the light of a Government secure in its majority, is that major changes to the loan charge are not likely. Optimistically, we may see some time limits imposed. Perhaps we may see some acknowledgement that years for which HMRC has failed to use the powers available to them should be excluded (closed years). Otherwise, we expect HMRC to be persuasive towards H M Treasury; we expect that department to view the “prize” as being worth the consequences, however severe.

This means that focus will need to be paid to resolving the substantive tax position – because of course the loan charge is an interim position – and this will spur on our efforts to progress our various tribunal actions for contractors, with vigour.

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