The UK now has a political party with a working majority which should give the Brexit process the backing it needs, but Yvette Nunn CTA ATT MAAT, director of Berkeley Associates is sceptical that this will end tax uncertainty for business
A majority government may help a little, but our tax system does not lend itself to long term certainty; it does not give businesses the comfort to plan ahead and invest for the future.
Indeed, just one of the manifesto points made by the Conservatives was to renege on an earlier Budget announcement to reduce corporation tax. The rate of corporation tax was to reduce to 17% on 1 April 2020, from 19%.
This might only add £2,000 to the tax bill of a company with taxable profits of £100,000 but the extra cost could make the difference for a business looking to invest in people or technology.
The extra tax going to the government has to come from somewhere and budgets and cashflow forecasts will now need updating for the extra cost. The change in the rate not only costs companies more in tax, but it rams home the message that companies do not have certainty, and without certainty, it is not easy to plan ahead.
