A law firm has called on the new chancellor of the Exchequer not to alter the tax benefits if the UK economy continues to take a pummeling in the wake of the Brexit vote.
Yesterday, Philip Hammond took the reins as chancellor after George Osborne decided to step down following Theresa May’s reshuffle of the cabinet.
Shortly after the cabinet roles had been announced, Mr Hammond pledged he would scale back on austerity measures.
Two partners at international law firm Berwin Leighton Paisner have given their views on what the chancellor should be thinking about as he looks at Britain’s tax policy for a post-Brexit world.
Elizabeth Bradley, head of corporate tax at Berwin Leighton Paisner, said the new chancellor’s “primary challenge” is now to reassure businesses and kick-start investment.
Ms Bradley said, however, some of the tax benefits - such as exemptions from tax on dividends, and tax deductions for interest - might change if the public finances worsen.
But she added: “The new chancellor would be wise to retain them, and where possible strengthen them, to preserve our competitiveness.”
Meanwhile, Alan Sinyor, partner and head of VAT, said lowering the VAT rate back to 17.5 per cent would “go a long way” to helping encourage people to spend.
“Mr Hammond should aim to simplify the VAT rules to make them more business-friendly.
“The government’s priority must be to do all it can to preserve the competitiveness of the UK, and simplifying and modernising the UK’s VAT system could play a key role in this.”