Tax image24 June was a momentous day for the United Kingdom, as 52% of voters elected to leave the European Union (EU).

The political fallout of the referendum result has been immense for both major parties with the Prime Minister’s resigning from office.

With Theresa May now leading the Conservative Party and taking the reins at Number 10,  the tax implications of leaving the EU (for both individuals and businesses) will be one of the key issues.

 

  • In the short term the long-awaited ‘Making Tax Digital’ consultations could well be put on hold until a new Cabinet is appointed.
  • The 2016 Finance Bill is already behind schedule and there have been some concerns that the Finance Act may not now get passed in early October.
  • Talk of an emergency Budget has now been downplayed. Although George Osborne highlighted corporation tax cuts as a possible carrot to incentivise firms to do business in the UK, the new Chancellor Philip Hammond may have his own ideas of what needs to be done in the wake of Brexit. The Autumn Statement may be an even more important this year than usual.

In the medium term, the changes that could take place in the tax system revolve around the formal date of exit from the EU. Direct taxes may be imposed by UK law, but they must be operated in accordance with EU law. VAT, for example, is both imposed and operated in accordance with EU law, which won’t change in the short to medium term. Once the UK has left the EU, it will be able to set its own rates. But the key question is: what changes may be necessary to facilitate business within whatever trading structures emerge? And we are unlikely to know the answer for some time yet.

If you are concerned about any aspects of your affairs, don’t hesitate to get in touch.