WITH the dust on last November’s Autumn Statement barely settled, it’s already time for the first of 2017’s two budgets.
It was no great surprise when the Autumn Statement was devoid of fiscal measures aimed at the oil and gas sector. Little more than three months on, the situation is unchanged with HMT unconvinced by the benefits of any special fiscal stimulus for exploration and the stabilisation of oil price at $50-$60 ruling out further deductions in the sector’s overall tax burden. There is little prospect of changes to the investment allowance at this stage with legislation that will enable its broadening to include certain non-capital expenditure still outstanding.
Further changes to decommissioning tax relief remains a work in a progress and could be on the agenda at a meatier Autumn Budget.
Looking beyond oil and gas, what could the Chancellor announce on March 8?
Further reductions in corporation tax are unlikely with the rate already due to fall to 19% in April before dropping to 17% by 2020. The Chancellor might consider offering tax reliefs for industrial buildings to promote further investment in the UK as Brexit looms on the horizon.
The taxation of employment, self-employment and private services companies is likely to come under close scrutiny, however, any changes to these complex area need to be subject of a proper consultation.
Changes to areas such as capital gains tax and the simplification of reliefs – there are more than 1,000 in the system – are possible but it’s very likely that this will be a relatively low-key Budget with the focus more on the latest OBR projections than tweaking of the tax system. The introduction of Scottish income tax powers has seen Scotland drift from the UK from a fiscal perspective. We wait to see whether this could be a shape of things to come.