The housing market
Abolishing Stamp Duty for first time buyers up to £300k is a very welcome and bold move. Ensuring it is stepped up to £500k also means it can provide meaningful benefits for first time buyers in the capital and other major cities.
One option we have not seen is of exempting properties taken in part exchange by builders from Stamp Duty. If they were exempt from Stamp Duty as temporary trading stock it would remove a disincentive for house-builders to redevelop existing stock and help stimulate supply. This would help get the housing market moving and help first time and buyers where the seller is unable to move.
We are pleased with the range of tax avoidance consultations which the Government has announced today. We will be working closely with the Government as well as OECD and EC to ensure that tax avoiders have no place left to hide.
We welcome the targeted, realistic and proportionate approach the Government has taken and this is exactly how we should ensure we stop the promotors and users of such schemes.
Income Tax Personal Allowances
We welcome the Government adhering to the manifesto pledge to increase the PA and the basic rate band up to £11,850 and £46,350 respectively from 2018. Individuals are suffering from a lack of earnings growth and relatively high inflation so this is welcome to them. But after the achievements of countering fiscal drag where, so many have been sucked in to the 40% rate of tax over the last few years, the Government should ensure that we do not let up on expanding personal allowances by at least the rate of inflation in the future.
The move to CPI from RPI for business rates revaluation is welcome, as well as reducing it to every 3 years. This is an important move towards a more accurate measure in line with global standards which provides greater certainty and stability for business.
We welcome the decision to keep the VAT threshold. The current VAT threshold at £85,000 is set appropriately for UK small businesses with the imminent introduction of Making Tax Digital. Given the pressures of implementation as well as any possible commercial changes due to Brexit, such as the loss of the mini one stop shop (MOSS), any changes could prove to be too great a burden for SMEs.
Productivity & skills
The Chancellor’s statement also included sound measures to invest in productivity and future skills. In particular the R&D tax credit and removal of benefit-in-kind tax on electric vehicles are good examples of how to use the tax system to encourage innovation and education.
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