ICAS welcomes Chancellor’s statement, but it poses more questions than answers
ICAS provides comment on today's emergency statement from the Chancellor and calls for action on a number of key areas.
ICAS broadly welcomes the new Chancellor’s emergency statement, which sets out a significant economic U-turn. Businesses and households need certainty and stability for planning and investment decisions and in making such a huge change of direction, the Chancellor has at least attempted to create some stability in the markets. But the statement still raised more questions than it answered.
The previous energy support scheme was only due to last for six-months for businesses, although for much longer for households. Announcing a Treasury led review today gives further cause for concern and increases uncertainty beyond April 2023. The incentivisation of energy efficiency is welcome, but it needs to form part of a much wider plan for net zero. We call on the Government to bring forward an environmental tax strategy or a roadmap to support the work of the energy price guarantee review.
Clarity is also sought on the future of the Office of Tax Simplification (OTS) as there has been no definitive statement on whether the planned scrapping of the OTS is to go ahead. With an increased focus on efficiency within Government, there is a stronger case for simplification of the tax system, bringing into starker focus the work and recommendations of the OTS. ICAS believes that the OTS should continue its useful role as a bridge between Government and a wide range of taxpayers and businesses.
Today’s announcement also confirmed that the current off payroll working rules will be retained and we broadly welcome that news. The previously announced reversal would have reintroduced greater uncertainty for contractors on their tax status and placed additional strain on HMRC in relation to tax compliance.
Our Members continue to be concerned by the poor customer service standards from HMRC which cause frustration, delay and difficulties for taxpayers, businesses and advisers. We need to see HMRC being resourced adequately to bring service levels back to an acceptable level.
The mainstream Corporation Tax rate increasing to 25% will increase tax complexity for companies whose profits fall between £50,000 and £250,000 with a return to marginal relief calculations.
Under the new announcement, Scottish taxpayers earning up to £27,850 in 2022/23 will continue to pay less income tax than the remainder of the UK whilst those over £27,850 will continue to pay more. The anticipated increase in block grant adjustment from the reduction in rUK Income Tax will now not materialise.