Quick and dirty Budget analysis #5: even more negligible

November 30, 2017

Income Tax: armed forces accommodation allowance exemption (page 72) Apparently members of the armed forces are provided with living accommodation free from the usual benefit-in-kind tax charge. Apparently the government intends to provide them with an accommodation allowance (if they’re stationed in the UK) instead, so they’re going to be excluded from the tax and NIC consequences of that, too.

Whilst I’m all in favour of the Armed Forces Covenant (people who are willing to get shot in our defence deserve decent treatment after all) I’m not convinced the best way of dealing with this is through the tax system. Maybe try providing better accommodation and/or better pay? Just a thought.

Income Tax: extending Seafarers’ Earnings Deduction to the Royal Fleet Auxiliary (page 75) This will affect about 900 employees of the Royal Fleet Auxiliary who have been getting Seafarers’ Earnings Deduction on a concessionary basis by disapplying the definition of “Crown employment” that excludes them from it. Sticking plaster for previously defective legislation, in other words. Sigh.

Corporation Tax: exemption for Northern Ireland Education Authority (page 116) Education authorities are exempt from corporation tax. In 2014 Northern Ireland re-organised its education authorities into one, but along the way no-one seems to have realised that, while the existing bodies were exempt from corporation tax, the new one wouldn’t be unless someone did something about it. In other words, another sticking plaster for some badly-thought-through legislation.

By the way, whoever wrote the equalities impact – about five minutes before it went to print, judging from the way it’s in a different font from the rest – is taking the mickey, surely?

As the measure does not impact on people, there are no equalities impacts

Stamp Duty Land Tax higher rates: minor amendments (page 159) When you look at a measure which affects “Schedule 4ZA Finance Act 2003” you have to ask whether the added complexity (seriously, the schedules get to a Z?) is justified by the gravity of the problem to be solved. In this case, it’s people getting divorced suffering higher rates of SDLT when they reorganise their property. I’m not convinced, but then I’m also not divorced.

Income Tax: scope of Qualifying Care Relief for self-funded Shared Lives payments (page 166) Qualifying Care Relief is a simplification scheme that lets people paying for their own care (for example when a local council gives you funds to pay a carer instead of providing a carer themselves) use a standard deduction rather than keep detailed records of expenses. At present it applies to a scheme called Shared Lives but only if the council pays for it and not if it’s self-funded. This piece of legislation gives the self-funded people the same option.

I have two objections here. First, does this not seem to be another sticking plaster on badly devised legislation? But more importantly, the TIIN says “up to 170” carers will benefit. I know that since the Wilkinson case there has been a huge reluctance to create Extra Statutory Concessions (ESCs) because the Court of Appeal didn’t think HMRC had the power to do so. Wouldn’t it be a great idea if, instead of faffing about with legislation like that, Parliament just gave HMRC the power to make ESCs again?

Extend First Year Tax Credits for 5 years and reduce the rate of claim (page 174) It’s a thing where loss making businesses can get a tax credit instead of capital allowances. (they would have got 100% capital allowances on water and energy saving plant and machinery except they haven’t got profits to set them against, so they get the tax credit – cash – instead). It was brought in with a five year sunset clause so it expires this year. It’s being extended.

Well fine: but where’s the analysis of whether it’s achieved its original policy objective and what the costs and benefits have been, huh? Isn’t that, you know, the idea of having a sunset clause in the first place???

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