Following one of the most unexpected results in British political history, all eyes are fixed firmly on Theresa May as she looks to implement her plans for government having now secured the support of the Democratic Unionist Party as part of a £1 billion deal.
Brexit remains a key issue for May, not just in terms of the ongoing trade negotiations with the European Union, but also the challenge of morphing EU legislation into a new British legislative programme termed the ‘Repeal Bill’. Its central aim is to clarify which EU rules still apply under the new British law, those which are to be amended as well as which regulatory bodies will govern and adjudicate any legislative disputes.
Due to the timing of the recent election, May is now simultaneously faced with another significant challenge: implementing a renewed fiscal policy amid calls to revise the Conservative austerity programme. Even within the Conservative party itself, fractures between cabinet ministers have been widely publicised in recent weeks, most notably following Boris Johnson’s comments on lifting the public sector pay cap, seemingly in opposition to the plans already laid out by Chancellor Philip Hammond.
However you view it, this story is a microcosm for the wider economic uncertainty that the UK is currently dealing with. The long-term impact of impending legislative reform in a post-Brexit economy is impossible to predict. Change is coming, business owners know that much at least, though what exactly they need to prepare for is harder to ascertain and, of course, depends on what type of business they are. With so many legislative changes on the horizon, now is the time to take stock of the key economic factors facing British businesses and the people who keep them running.
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Corporation tax and other duties
One thing that May has remained firm on is the Conservative plan to cut corporation tax for businesses to 17% by the year 2020 – the lowest corporation tax rate of any developed economy. This is in stark contrast to Jeremy Corbyn’s Labour manifesto which set out plans to raise corporation tax to 26% by 2020.
Depending on which line of work a British business finds themselves in, there are also a number of other business-related taxes that are currently influenced by EU law and that are therefore expected to be revised in the aftermath of Brexit as part of the Repeal Bill. This may cover everything from the Common Agriculture Policy that is currently imposed on UK farmers and fisheries, to the Remote Gaming Duty paid by businesses like Mr. Smith Casino, who have registered their casino online on the UK domains, and provide their services to customers in the UK. The staggered tier structure and parameters around rates of pay for such taxes may also be subject to review as a result.
Tax changes for self-employed
Self-employed workers should be aware of the wealth of new tax changes, particularly rules on personal allowance and inheritance, that have been introduced within the past few months. Philip Hammond has confirmed a £500 increase in the personal allowance threshold taking it to £11,500, as well as a higher rate for the 40 per cent tax threshold which is now set at £45,000.
One change that was initially outlined in the 2017 Budget was an increase in National Insurance Contributions (NICs) for workers with self-employed status; however, this measure has since been dropped for the time being by Hammond following pressure from business groups and the press. NICs will therefore remain fixed until 2018 at the very least.
A waiting game
These legislative updates are effectively the tip of the iceberg and only time will tell the extent and impact of legislative changes following Brexit, or indeed whether Theresa May will continue her hard line of austerity at all costs. Until then, British businesses and individuals will inevitably look for answers in the short-term, particularly where potential updates on taxation are concerned. Even so, the next year or so looks set to be a waiting game for the UK economy as a whole as the Brexit saga continues to unfold.
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