UK government unveils a raft of spending measures amid national and global uncertainty.
By Karl Mah
After a somewhat turbulent period that saw the cancellation of the Autumn 2019 Budget due to lingering Brexit uncertainty, the resignation of the former Chancellor of the Exchequer, and the outbreak of COVID-19, it was unsurprising that the UK government elected to avoid making substantive changes to the UK’s business tax system in the Spring Budget 2020.
Several headline announcements — such as the reduction in Entrepreneurs’ Relief and confirmation of the introduction of the new Digital Services Tax — featured as expected, and the budget also outlined several tweaks that are consistent with the government’s political objectives, including increases to capital allowances rates to boost infrastructure, the SDLT surcharge for overseas property buyers, and changes to pension taxation.
Other interesting announcements covered future consultations on the hybrid mismatch rules and UK investment fund taxation, and, more alarmingly, the introduction of an obligation on large businesses to notify HMRC when they take a tax position that HMRC is likely to challenge. Stakeholders hope that the details of this particular proposal turn out to be sensible, rather than an “anti-avoidance” change to the tax code that creates additional cost and confusion for UK business.
Latham & Watkins will continue to monitor the government’s proposals as more details are made available in the coming weeks.