Gary’s Big Autumn Budget Prediction 2021
Touch My Crystal Ball
The next important thing on any accountants horizon is the forthcoming budget on 27th October.
Obviously, 2021 has been a strange year like no other. We have just come to the end of the pandemic furlough scheme; the redundancies are therefore just about to start. Our industry has been crippled like its cousin, hospitality, by a lack of travel both internally and externally. Even though we are still waiting for overseas travel to bring our passengers in, internally operators have been hit by massive labour issues, both pandemic and Brexit based.
Many drivers were forced to give their vehicles back to their rental companies, even worse, many owners had no choice but to hand back their keys to their vehicle financiers, and because cars and certain parts were not being made through the pandemic, we have massive waiting list for new ones and a price hike for second hand.
HMRC Is Getting Their Claws Sharpened.
To top it all HMRC are starting to think about how the self-employed are going justify their self-employed grants, if by good grace they managed to earn nearly the same as the last year in a last minute ‘back to work’ frenzy. And they will be asking for their grants back if they don’t think you deserved it. (More on that next month or ask an accountant).
It is with this in mind we wonder whether the govt will put a sticking plaster and some cooling ointment on our pains or just rip the scab off and pick the wound, in this ‘technical budget.’ To be fair, Making Tax Digital, the massive new HMRC digitisation process and all of its prospective headaches has been pushed back again to 2024, allowing all of us accountants and normal people alike, a little breathing space.
The Professionals View
So here are some thoughts both from myself and other accountancy pundits on what might be in store for us, or for that matter what we think should be in the budget.
What We Know
Well, we know since Mr Sunak has already launched a spending review pre budget, there will be tightening of the purse strings. I think we all knew that. Also, climate change will almost definitely be on the menu. UN Conference of The Parties (COP26) is in Glasgow at the end of October).
National Insurance is definitely increasing by 1.25% to cover increase health and social care costs. There will be some unexpected state pension halts and there must be some tax increases somewhere to try and reduce the £2.6 Billion tax gap, and the further effects on the govts pandemic spending. i.e., the soon to finish furlough scheme.
What We Think We Know
Taking that into consideration, there must still be money for the Covid health response and some specific business pandemic recovery help. We still need to know what recovery will actually look like for us.
The Government has already said that it will be looking at strengthening public services, levelling the playing field (in opportunity) within the UK, promoting Britain globally and moving forward their ‘Plan for Growth.’ I wait to see the governments definition of this post Brexit and in pandemic recovery.
Thanks to some work by the hilariously named Office of Tax Simplification, there may well be changes to Inheritance Tax and Capital Gains Tax, this has been a big win for HMRC: simple means easy wins for them without affecting ‘the average tax payers’ bottom line. The other easy win, not universally popular, will probably be the freezing of personal tax allowances which normally rise (to our advantage) annually.
Finally lets see if the govt can keep their promise on freezing fuel duty for the 11th year running. I suspect that in the mind of the chancellor, it may be time for it to rise.
A Bit of What We Wish For.
For Operators:
Maybe some help for medium size businesses (over one mill) with cash flow problems by increasing the ceiling for the VAT cash accounting system (a system which allows you to pay VAT only when your client pays your bill).
A simplification of the now ridiculously complicated EU VAT laws post Brexit.
The ability to easily reclaim overseas sales tax which is also (post Brexit) unclear and in need of work by HMRC.
For Everyone:
The hospitality industry benefitted from a reduced VAT rate of 5%, shouldn’t passenger transport get a little of that help? Many fleets are significantly reduced, and the big tech apps get the offshore VAT breaks, so let’s even the playing field a little, even just during our recovery.
Conclusion:
To be fair, our government has a tough call between refilling their coffers to continue their plans and helping us recover from the financial horrors of the past eighteen months. Let’s just hope they will remember the importance of this country’s passenger transportation industry.
See you on the other side. Drive Safe (if you can get the fuel)
Gary
Gary Jacobs is the MD of Eazitax.
