22 Oct 2019
Brexit Part 7: Taxation
For over three years now we have had the shadow of Brexit looming over the UK, and this has, in my view, prevented anyone from having a clear plan of where they wish to go with their business or private client planning. Irrespective of your personal views on whether we should be in or out of the EU, this has created a paralysis which is unhealthy for UK Individuals and businesses. This needs to be sorted out one way or another very soon, so that our clients can plan for and hopefully prosper from whatever the future holds.
The UK, despite what anyone will tell you, is already a high tax country, and although capital gains tax and Inheritance tax are chargeable at lower rates than we have seen in past years, it is those taxes that can damage the capital base of the business entrepreneur and take funds out of the re-investment cycle. Whilst losing over half your income to income tax is a one-off hit to an individual, the loss of 40% of your capital has severe financial effects.
The Conservative and Labour governments have very different views on capital taxation, and it is perhaps the results of the next UK Election that will determine whether the UK thrives or goes into recession, rather than the final result of the Brexit process. The UK has a Budget planned for 6th November and if this takes place, we will hopefully get some indication of where tax policy will go if the Conservatives are re-elected, although I do not expect much of any such Budget to be implemented in the short term.
Interestingly, I hear that Jersey in the Channel Islands has had over 150 very wealthy entrepreneurs enquiring about moving to the Island in the last year, when usually such enquiries are less than 20 a year. This shows when money is scared, it will move to where it feels safe.