Although growth forecasts were downgraded earlier in the year, the forecasts for all years from 2019 to 2023 were increased. Mr Hammond reported that the public borrowing is forecast to be £11.6bn lower than previously expected in 2018 and the Debt/GDP ratio peaked at 85.2% in 2016-17, with the expectation that it would fall to 83.7% in 2018 and to 74.1% by 2023-24.
These are all positive indicators, although how Brexit might ultimately impact is anybody’s guess, given the continuing doubts as to what the exit might look like.
On the subject of Brexit, further funds of £500m were committed to the exit preparations and it was announced that the Spring Statement in 2019 may ultimately turn out to be a full Budget. This is a precautionary measure, in view of the doubts over the economic impact that Brexit will have after March 2019.
There were also positive forecasts of the creation of an extra 800,000 jobs by 2022, which when allied to the increased growth forecasts, appear to have provided the opportunity for the Chancellor to accelerate certain commitments that were made in the government’s manifesto. The highlight for UK income taxpayers came at the end of the Chancellor’s speech, with increases in the personal allowance to £12,500 and the threshold at which the 40% income tax rate is charged to £50,000 with effect from 6th April 2019, a year ahead of schedule.
It may have appeared to be a relatively quiet affair from an offshore perspective compared to the events of recent years, but nevertheless there were a few points of note, some of which were buried in the detail.
There were two significant announcements, namely new tax charges in relation to:
Both may have some impact on certain Isle of Man businesses, although in the main these measures were directed at those multinational groups that generate profits in the UK via entities within mainland EU jurisdictions.
Two measures that were already known prior to the Budget, but which are worth reiterating, are the introduction of a new capital gains tax (‘CGT’) charge for all UK real property held by non-UK residents and a move to UK domestic corporation tax for offshore property-holding companies:
A further announcement suggested that property holding by non-residents may be hit yet again. The government will publish a consultation document in January 2019 on an additional Stamp Duty Land Tax charge of 1% for non-residents who acquire residential property in England and Northern Ireland. An updated offshore tax compliance strategy will also be published, which is intended to build on the efforts in tackling offshore tax evasion and non-compliance since the previous strategy was published in 2014. We should expect an increased focus on information sharing.
Finally, although perhaps a more obscure reference, the Isle of Man did receive a specific mention in the published documents. The Soft Drinks Industry Levy (‘SDIL’) will be included in the list of common duties for the UK and Isle of Man. SDIL is due to be introduced locally from 1st April 2019.
Andrew Cardwell, Tax Director, PwC Isle of Man
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Director, PwC Isle of Man
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