LNB News 29/10/2018 102.
The government has allocated an additional £500m of funding for its preparation for the UK’s exit from the EU. This funding aims to help departments manage pressures and contingencies arising from EU exit preparations which fall in the 2019/20 financial year. The government will also make small, essential changes to UK tax law to maintain the effect of tax legislation if the UK leaves the EU without a deal.
The government, led by the Department for Exiting the European Union (DExEU), is continuing to seek a meaningful relationship with the EU, but has a responsibility to plan for all scenarios, including if no mutually satisfactory agreement can be reached with the EU.
DExEU continues to refine these plans of March 2019 and has published a series of notices so that businesses and citizens are prepared.
Tax legislation
Consequential minor amendments will be made to UK tax law to maintain the effect of tax legislation if the UK leaves the EU without a deal. Changes made will maintain current operation of the tax law in essential areas, including changes in line with no deal legislation in other parts of the law.
Industry comment
On the impact of a ‘no deal’ Brexit, Carolyn Fairbairn, CBI Director-General, said: ‘There is no hiding from the dark clouds of Brexit uncertainty. The Chancellor has made clear that this Budget will need urgent attention in the event of “no deal”, showing yet again the seriousness of the situation and the need to get a good deal over the line.’
Clive Weber, partner at Wedlake Bell LLP: ‘The Chancellor’s Budget on 29 October 2018 contained no pension tax surprises. Instead a deafening silence prevailed apart from confirmation that the lifetime allowance rises in line with the CPI to £1,055.000 from April 2019. Well and good if a suitable Brexit agreement is reached. However, the Chancellor will not have forgotten his potential armoury of tax raising measures if Brexit goes badly–reducing the annual allowance and further restricting the lifetime allowance continue to be rabbits the Chancellor could, if things go badly next spring, pull out of the hat.
‘The Office for Budget Responsibility forecasts have suddenly become favourable. However economically and geo-politically there are potential significant problems ahead for the UK, the EU and indeed worldwide. The Chancellor is reported as considering current tax breaks for individuals as very generous for registered pension schemes and their members and sponsors–an easy target to hit if Brexit ends badly. Pension tax treatment has temporarily been placed on the back burner, but the flames are not extinguished.’
Hew Edgar, Interim Head of UK Policy, at Royal Institution of Chartered Surveyors (RICS): ‘It covered many bases, but this budget did not quite live up to the Chancellor’s claim that it would prepare the UK “for every eventuality”. The Chancellor opted to look inward and tackle domestic issues, but there was very little mention of Brexit.’
Paul Falvey, tax partner at accountancy and business advisory firm BDO LLP: Most notably of all, it is clear there is little appetite for any significant new tax measures until Brexit negotiations are complete.
‘This was evidenced by BDO’s pre-Budget poll, which found that a significant majority (59%) of respondents thought finalising Brexit negotiations quickly is the single most important action that the chancellor should take to boost the British economy.
‘Hammond talked of a “double deal dividend” for the economy if an agreement with the EU is reached, but also promised to be watchful, hence the idea of the spring statement becoming a “full fiscal event” if necessary. This is code for an emergency budget in the event of a no deal.”
‘From a tax perspective, there will be sense of relief that things could have been worse, but there’s not much to cheer. The slightly better than expected economic indicators offered the chancellor some minor giveaways, and there were some further welcome revenue-raising measures. However, none of this will allay Brexit fears the Chancellor barely mentioned it in his speech–and limited investment reliefs will Tim Pugh, solicitor and consultant specialising in infrastructure planning and environment
As in previous years, the Chancellor’s budget speech itself was rather shorter on information than the Red Book (to be found on the Treasury web-site) published shortly after he had finished. Brexit was largely a great unmentionable, despite capital expenditure budgets for DBEIS and Defra to deal with Brexit implications having been set at £185.1 and £350m earlier this year and potentially having benefitted proportionately from the £5bn extra Brexit preparation funding announced today.
‘Tim Pugh, solicitor and consultant specialising in infrastructure planning and environment: ‘As in previous years, the Chancellor’s budget speech itself was rather shorter on information than the Red Book (to be found on the Treasury web-site) published shortly after he had finished. Brexit was largely a great unmentionable, despite capital expenditure budgets for DBEIS and Defra to deal with Brexit implications having been set at £185.1 and £350m earlier this year and potentially having benefitted proportionately from the £5bn extra Brexit preparation funding announced today.’
Source: Budget 2018: Brexit
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This was first published by LexisNexis on 29 October 2018.