Chris Sanger, EY’s Head of Tax Policy, said:
“As the UK woke up to the news that the Conservatives have a significant parliamentary majority, many will now be starting to ask what the proposed tax changes outlined in the party’s manifesto and in comments made during the election campaign might mean in practice.
“While there is an element of ‘business as usual’ from a tax perspective, the election campaign did signal a shift in emphasis, not least with the cancellation of the scheduled cut in next years’ corporation tax rate and the references to reforming entrepreneurs’ relief and limiting arbitrary tax advantages for the wealthiest in society. Beyond this, progress on Brexit may also produce issues to be resolved for the new world after we leave the EU. The scale of the Conservatives’ victory not only gives momentum to the Brexit process, but leaves the Government with some flexibility over the detail of the negotiations on the desired Free Trade Agreement.
“The manifesto set out some of the Conservative’s thinking, and the promised Budget in February will give taxpayers the opportunity to see the finer details of the proposed changes sooner rather than later.
“In fact, the tax content of the manifesto had much of the flavour of a Budget, so it is relatively easy to predict how these promises translate into Budget measures. The real question will be whether the Government, empowered by its significant parliamentary majority, chooses to supplement these manifesto commitments with new, bolder policies.
“Budget confirmation of the increase in allowances supporting investment – such as the increase in the rate of structures and buildings allowance – will be welcome. At the same time, the removal of the risk of the introduction of the ‘Inclusive Ownership Fund’ concept ends concerns that this policy had created for the use of UK as a headquarter location. Businesses can now start to engage with the Government ahead of the February Budget.