Accounting professionals will be relieved that the Budget did not include an immediate extension of controversial IR35 rules governing off-payroll working.
It had been feared that there would be a quick roll-out of IR35 to the private sector, even though the legislation is not yet working properly in the public sector.
The Chancellor recognised the arguments of AAT and other bodies that private firms need more time to prepare for changes.
However, celebrations will be muted, as the Government resisted calls to reexamine the scheme and will press ahead with the scheme a year later in April 2020.
“With there being no evidence to date that ‘off-payroll’ rules have worked in the public sector last year, it’s clear more work needs to be done to truly define those taxed as employees and those taxed on a self-employed basis, and to allow private sector businesses adequate time to prepare,” said Brian Palmer, AAT Tax Policy Advisor.
Other highlights in the budget include the £900 million of business rates relief for small business, which be a shot in the arm for many clients of accountancy firms.
“The immediate – if temporary – business rates cut for smaller retailers will provide funding that many desperately need. ” said Palmer.
“But we would rather see a fundamental (and essential) review of business rates undertaken in the near future, and in the meantime keep rates frozen across the board so that companies with both a strong high street presence and digital presence aren’t unfairly affected. Reform is desperately needed, but needs to be well thought-through.”
Increased support for apprenticeships is a change that could benefit the accounting and bookkeeping professions. Employers’ contributions towards apprenticeships will be cut from 10% to 5%, at a cost of £695 million.
In AAT’s view this will reduce the burden on employers, but ensure they retain a sufficient financial stake to take their responsibilities seriously.
All in all, the pre-Halloween Budget was measured, rather than inspiring.
“This Halloween-week Budget suggests the Chancellor may be spooked by ongoing Brexit negotiations – notably with the promise of a possible Spring Budget depending on a deal being agreed or not.
“It did, however, suggest the Government had exorcised enough taxes to increase funding for vital public services, as they seek to finally end the austerity which has dominated our financial planning for the past decade.”
David Nunn is Content Manager at AAT.