Monday 29 October has been a real trip down memory lane.
As I try and get used to the clocks going back an hour, Philip Hammond seemed more intent on going back 56 years.
The excitement of a first Monday Budget since April 1962 meant there were many historical references. I had already bored my colleagues with my recollection of the 1962 Finance Act which was introduced by Selwyn Lloyd and the political backdrop of the early 1960s.
And the Budget was a very traditional one – an increase in public spending, income tax cuts for everyone, more generous capital allowances and tightening up of PAYE procedures.
What that really means is that it was a Budget that the Chancellor hoped that everyone in his party would feel able to support, so that there was no risk of being defeated on a Budget motion or threat of any unseemly U-turn.
So, we have the reintroduction of what is effectively industrial buildings allowances (IBAs) but now extended to offices and shops as well. It is called Structures and Buildings Allowances (SBA) and writes off a building over 50 years, which is the rate that last applied in 1962 before Reginald Maudling reduced the period to 25 years in November that year after he replaced Selwyn Lloyd as Chancellor.
When I qualified, there were industrial buildings being written down at both two percent and four percent although there were also initial allowances as well. Initial allowances were abolished by Nigel Lawson when he slashed the tax rates other than a brief resurgence for a year under Norman Lamont in the early 1990s before being phased out by Gordon Brown from 2008. IBAs applied to hotels and there were also agricultural buildings allowances but shops and offices got no tax relief – despite lobbying that they should. The result was to encourage maximising plant in buildings.
And on the subject of plant in buildings, more perniciously, the new SBA is being funded by a cut in capital allowances on existing long life plant and machinery. So what looks like a tax break is in fact taking from businesses that have already spent money on buildings to try and encourage others to spend new money on new buildings. A bit underhand really but it does show how tight things are.
Then, of course, the new SBA is to encourage investment and to be internationally competitive whereas when IBAs were abolished it was because they were considered a poorly focused subsidy in the booming economy of 2007. Perhaps the world is different 11 years on, although I note from Hansard that William Clark MP called for IBAs to be extended to all commercial buildings back in 1962.
As well as SBAs though, the limited extension of rates relief and the even smaller additional tax on very large internet based retailers is all consistent with a desire to be seen to be supporting traditional small businesses.
On reflection then, I’m not sure that 1962 is the best comparison for this Budget. Instead it reminded me of the Conservative ones of the 1990s. Norman Lamont to be honest. I recall those ones as being mainly about capital allowances, retirement relief changes and increases in company car taxation. For retirement relief, now read entrepreneurs’ relief but there was nothing on cars – rather instead a freeze on fuel duty.
It is though worth highlighting the dogs that didn’t bark.
The long list of measures that the Sunday papers have been getting excited about just didn’t get a mention. Too contentious to be raised in the Chancellor’s speech. Anything tricky has been kicked forward – even IR35 and the private sector is pushed out to April 2020 instead of next year and limited to larger private sector employers. Even though it is the largest tax raising measure in the Budget. No reference to pensions or inheritance tax either – all too difficult.
Instead, it was actually a very simple Budget. It also looks like we’ll be doing it again in March.