Brexit Club and the After Hours Arrangements
In the world of financial planning, taxation implications for clients are almost always to the fore. It’s reassuring therefore that there’s a soothing rhythm to the tax cycle.
- The tax year will end on 5 April
- The new tax year will start on 6 April
- The budget will occur in the spring
- The autumn statement will occur in the autumn/winter (depending on your perspective!)
- New rates, bands, and allowances will commence after one of these events
Occasionally this pattern is disturbed, with the most recent example being the post-election summer budget of 2015.
What, then, are the implications of Brexit?
George Osborne, in his statement following the outcome of the EU referendum, made it clear he had no intention of rushing into an ’emergency’ budget:
“…it is sensible that decisions on what that action should consist of should wait for the OBR to assess the economy in the autumn, and for the new Prime Minister to be in place”.
Philip Hammond, having replaced George, doesn’t seem to be saying anything different, but what will be announced in the post-Brexit autumn statement/budget? We can only speculate on the impact on government spending and taxes, but of course that’s always the case with a budget or autumn statement. Does financial planning grind to a halt in advance of these events? Certainly not, and, to a large extent, the opposite is the case. Prior to any budget, clients might advance rather than delay contributing to a pension, planning to reduce a potential IHT liability or investing into an ISA.
The Brexit decision should not fundamentally change this mindset. Some clients will be more optimistic, some less, but regardless of personal views it should be remembered that the UK has always retained primary control over direct taxation. Remember that direct taxes are those affecting bread-and-butter planning for clients – capital gains tax, income tax, inheritance tax and national insurance contributions. Those taxes may well be varied in the post-Brexit autumn statement/budget and some may rise and others may well fall, but that’s life and business as usual.
The impact of Brexit on taxation may be felt in the world of indirect taxes, such as VAT. Perhaps we’ll witness a new approach, freed from the restrictions imposed by the EU. In any event, that will be a side issue for most clients.
The final word on this subject is best left with the UK’s tax, payments and customs authority – HMRC. If you called its helpline just after the referendum (0300 200 3310) the following message was delivered:
“There are no changes in any taxes, tax credits, child benefits or other HMRC services as a result of the vote on the EU referendum. Everything is continuing as normal. No laws have changed. There is no need to contact HMRC as a result of the EU referendum”.
Changes aren’t permanent, but change is…
If you would like to discuss any issues then please do not hesitate to contact us.Contact Us