Legal Experts Explain Impact Of Chancellor’s Key Announcements
A team of legal experts at national law firm Irwin Mitchell have been closely monitoring today’s Budget to decipher what the key announcements mean for you and your business.
In his first Budget, the Chancellor, Philip Hammond, promised to help firms hit by business rate increases but hiked up national insurance bills for many of the self-employed workforce.
Discussing the economy he said growth was expected to be higher than forecast in November but added that borrowing would be lower.
Addressing Parliament, Mr Hammond said although the UK economy "continued to confound the commentators with robust growth", the UK's deficit was still high, and productivity "stubbornly low".
- His other announcements included:
An extra £325m for NHS reform programmes
- Transport spending of £90m for the north of England and £23m for the Midlands to address "pinch points" on roads
- £270m for maintenance of existing schools
- Extending free transport to all free school meals pupils who attend selective schools
It is expected to be the final Budget before the UK formally gives notice of its departure from the EU by triggering Article 50.
The team, based in Irwin Mitchell’s offices across the UK, have analysed the legal implications of the announcements and commented on what they mean for individuals, families and businesses.
Find out more about Irwin Mitchell Private Wealth, and Irwin Mitchell’s Business Legal Services.
Partner and construction expert Gordon Anderson welcomed news that the Government would be investing in improving infrastructure in the North of England, but added the funding was a drop in the ocean.
Expert Opinion“A bit of a damp squib of a Budget for the construction sector should not have come as a surprise to many - given the lack of any real Opposition with a plan, and an economy performing better than expected (although that depends on your expectations).
Money for old roads will please those in the North, where a quarter of respondents to the Irwin Mitchell UK Powerhouse survey in 2016 said investment in roads was the number one priority for future economic prosperity. But sadly £90m doesn’t buy much tarmac these days nor does £216m when it comes to the repair and maintenance of existing school stock.” Gordon Anderson - Partner
Penny Cogher, a pensions expert and Partner at Irwin Mitchell discussed the Chancellor’s surprise announcement on Qualifying Recognised Overseas Pension Scheme (QROPS) to make the tax system fairer.
Expert Opinion“There will be a severe clamp down on QROPS, qualifying recognised overseas pension schemes from tomorrow
“As a surprise move, and announced to be in line with the government’s objective of promoting fairness in the tax system, transfers to QROPS, qualifying recognised overseas pension schemes, requested on or after 9 March 2017 will be taxable at the rate of 25% unless, from the point of transfer, both the individual and the pension savings are in the same country, both are within the European Economic Area (EEA) or the QROPS is provided by the individual’s employer.
“Strict measures have been put in place to ensure compliance as both the scheme administrator of the registered pension scheme making the transfer and the scheme manager of the QROPS are jointly and severally liable to the new 25% tax charge. Where there is a tax charge, they are required to deduct the tax charge and pay it to HMRC.
“Advisers must now take this new tax charge into account if they have clients who want to make an overseas pension transfer.
“QROPS providers need to submit a revised undertaking to HMRC by 13 April 2017. If not, the scheme will stop being a QROPS from 14 April, giving them little time to take the necessary action.
“The changes also widen the scope of UK taxing provisions. Following a transfer to a QROPS on or after 6 April 2017, the extended taxing provisions on payments out of QROPS apply on and after 6 April 2017 to payments out of those transferred funds in the five tax years following the transfer.
“These changes are not meant to impact on overseas transfers from pension schemes that have had UK tax relief that are made when people leave the UK and take their pension savings with them and settle in their new country of residence. However it can be difficult in practice to achieve this because of restrictions which other countries have on pension transfers. Equally the changes do not apply to transfer of pension savings that have already been made to QROPS.
“Legislation will be introduced in Finance Bill 2017 to reflect this and also HMRC will provide guidance setting out how the new tax charge will work and the new obligations.” Penny Cogher - Partner
Chichester based Senior Associate and chartered tax advisor, Liz Beadsley, from Irwin Mitchell Private Wealth commented on the impact of the Government’s intention to introduce quarterly tax returns for the self-employed.
Expert Opinion“The Government is introducing Making Tax Digital (MTD) from April 2018 under which the self-employed and landlords with turnover in excess of £10,000 will be required to report their income and expenses quarterly to HMRC. HMRC had proposed a deferral for one year for those with turnovers over a certain amount and had been consulting on what that limit should be. They have today announced that where the turnover is below the VAT threshold, quarterly reporting will start from April 2019. Whilst this deferral is to be welcomed, it still means that a large number of businesses will have to be the guinea pigs for quarterly reporting under MTD.” Liz Beadsley - Chartered Tax Advisor & Manager - Partner