Chancellor sprinkles ‘fiscal confetti’ on taxpayers

PHILIP Hammond promised a Budget for "the strivers, the grafters and the carers" - before going on to sprinkle some fiscal confetti on taxpayers.

Northern Ireland fared reasonably well from the Chancellor, with the Belfast Regions City Deal being given the green light (albeit with less than the anticipated £450m), some £320m handed to government departments under the Barnet Formula, an extra £300m for shared and integrated cross-community education programmes, and £2 million towards reviving the city centre after the Primark fire.

Personal tax allowances, meanwhile, will rise to £12,5000 from next April for those on the basic rate band (the higher tax band increases to £50,000), benefitting tens of thousands of people in the north.

But the Chancellor ruled-out cutting either VAT on tourism or an immediate end to short-haul APD for Northern Ireland.

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Janette Jones, PwC NI tax leader, said: “Despite a Budget that covered a vast amount of ground with a net tax giveaway of just over £5 billion the Chancellor has left the door wide open for another major fiscal event in the spring.

“This was a Budget sprinkled with giveaways and mini-crowd pleasers in the form of cheap, light and airy personal tax measures.

“The personal tax measures were more tinkering than transformational, with the headline being his decision to continue to increase the personal allowance.

“With wage inflation of 2.7 per cent, it should mean that those with average or better wage growth see the tax bands move with them. But the lowest paid taxpayers who earn less than the current personal allowance won’t see any benefit.”

She said Mr Hammond's decision to create a new digital services tax may have unintended consequences.

“This was widely trailed as a step towards levelling the playing field between online retailers and the high street. But the Chancellor has opted for a narrow 2 per cent rate, an implementation date of 2020 and aimed it at the tech giants and not the online retailers.

“It will do little to address the woes of bricks and mortar retailers and could even be perceived as an anti-American measure and that could come back to bite us as the UK looks to move to trade talks after the Brexit deadline.”

Looking at the small print of the Budget makes an immediate and significant change to Entrepreneur's relief which will impact smaller employee shareholders.

“The relief which is worth up to £1m on the sale of qualifying shares will be narrowly targeted at employees who have at least a 5 per cent stake in their company's profits and net assets - those who own less will get no relief.

“This makes the relief more targeted on those with significant stakes in the business, but risks creating two tiers of employee shareholders – potentially and overall disincentive effect for the business as a whole.”

Read More:

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• Spend now, tax later…