Speculation about the contents of the Budget continue. The scope of Chancellor Philip Hammond is limited due to the government’s existing cuts to spending and a budget deficit nine years into an economic recovery. The cancellation of the cut to corporation tax (due to drop to 17% from 1 April 2020) would have a limited short-term impact but could generate significant revenue in successive years without compromising the UK's position as having the most competitive corporation tax rate in the G20. However, it is possible that corporation tax will be reduced still further to 15% to increase international competitiveness.

An earlier decision not to abolish Class 2 national insurance contributions (NICs) could lead to general increases, perhaps particularly on the self-employed.

The Chancellor is likely to expand on the future of Making Tax Digital (MTD). With Brexit on the horizon and approximately only a third of businesses ready for MTD for VAT’s introduction in April 2019, the introduction of a new system for assessing VAT will be made complicated by whatever deal is reached with the EU. It is possible that the implementation will be delayed and the future expansion of the program subject to review.

Another review of business rates may be announced, following on from the current system’s impact on high street chains and several recent high-profile insolvencies. It is possible that there will be a move towards partial self-assessment for the forthcoming 2021 revaluation, requiring occupiers to provide detailed information in respect of both their properties and the terms of their occupations.

The prime minister has recently pledged that fuel duty will be frozen for the ninth year in a row and this is likely to remain the case. The Institute for Fiscal Studies (IFS), which estimates that frozen fuel duty costs the Treasury about £9bn a year, has recently suggested moving to a system of 'uprating fuel tax every month in line with inflation' as a possible way of reinstating index-linking of fuel duties.

It has been speculated that changes to IR35 legislation, which concerns with the taxation of public sector contractors who offer their services via intermediaries, will be announced. Following a consultation over the summer, the government is seeking introduce corresponding rules for the private sector.

Tax simplification may feature in the Budget as the expansion of the UK's tax code over the last decade has led to calls for reform. The Office for Tax Simplification (OTS) published a review of tax on savings income in May which found unnecessary complexity, and has been commissioned to report on the possible simplification of IHT, due to be published this Autumn.

For updates on the Budget as it is announced, visit accountancydaily.co/budget

Report by James Bunney