Tax changes advisers should watch for in 2020

Tax changes advisers should watch for in 2020

The new government is planning a number of tax changes in 2020 about which advisers should be wary, according to a senior tax partner at RSM. 

George Bull said that while the 'tax lock' - ruling out increases in income tax, VAT or national insurance - appeared a positive move, advisers should not be lulled into a false sense of security.

He said: "Interestingly, the manifesto promise did not extend to taxes such as capital gains tax. This commitment raises two fundamental questions. First, if a government finds itself in urgent need of raising more taxes, increasing the rates of established taxes is a quick and simple way of achieving this. So why would a party taking power when the UK economy faces a period of significant uncertainty reduce its fiscal capacity in this way?

"Second, haven’t we been here before? As the Cameron/Osborne government discovered, the credibility of the ‘triple lock’ commitment not to raise income tax, national insurance or VAT rates quickly comes under strain as people see stealth taxes being used to boost the amount of tax they pay as a percentage of GDP."

But he noted that the previously announced plan to cut corporation tax to 17 per cent from 19 per cent, which was due to come into force in April, has been scrapped, immediately raising extra money for the government than had been budgeted for. A digital service tax on tech giants will also be implemented next year.

Mr Bull expected these changes to raise £8bn in extra revenue for the government. 

He expected the focus of the new government's new tax gathering measures will be to focus on closing tax loopholes. .

He said: "As laid out in the manifesto, the main plank of Conservative tax policy will be to introduce a new anti-tax avoidance and evasion law.

"In a bid to reduce the UK tax gap of around £35bn, the new law will create a single, beefed-up anti-tax evasion unit in HMRC which covers all duties and taxes, from individual errors to deliberate non-compliance.

"If successful, this unit will raise very significant amounts of money for the Exchequer without the imposition of any new taxes.

"Introducing a Stamp Duty Land Tax surcharge of 3 per cent for non-residents buying UK residential property will also boost tax receipts. More welcome to many, the government will begin the process of increasing the national insurance threshold to £9,500 (currently £8,632), with a pledge to eventually increase this to £12,500 to be in line with income tax."

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