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09 March 2017

2017 Spring Budget – The highlights

Commercial Real Estate on business rates:

‘Any softening of the impact of a hike in business rates will be warmly welcomed by the property sector and particularly the retail sector.
The rise in rates can be seen as a perfect storm being calculated by reference to an extended review period of 7 years from 2008 to 2015 and contrasting low market values post-crash to pre-brexit 2015 values.
At a time when many landlords are trying to rejuvenate their estates with a mix of smaller independent businesses, it is those fledgling businesses that will lack the scale to withstand large increases on one-off units.
The capped rise for those losing small business rate relief will be gratefully received but it will increase the strain on competitors who were not fortunate enough to qualify for the relief previously.’

Jonathan Fewster, Real Estate Partner

‘The overhaul of business rates is merely tinkering around the edges of the problem. The key issue for businesses is the uncertainty created by length of the valuation period and the appeals process as the market can move significantly within this time. As a result the rateable value can quickly cease to reflect the actual value of the property.’

Simon Burson, Real Estate Partner

Residential Real Estate on Stamp Duty Land Tax:

‘The Government should have taken this opportunity to reform the stamp duty regime. The changes since 2014 have considerably dampened the residential property market and have seen a fall in the amount of stamp duty revenue collected. Homes valued over £1m have been worst hit by stamp duty land tax, which is in serious need of review, as is the 3% surcharge on second homes.’

Hema Anand, Real Estate Partner

Employment on the national insurance increase for the self-employed:

‘The large increase in national insurance contributions for self-employed individuals could have a significant impact, particularly for those working in the gig economy who have traditionally been engaged on a self-employed basis.
Favourable tax arrangements have been one of the benefits of self-employment and individuals may be less willing to accept the uncertainty of this type of work if they will ultimately receive less money in their pockets.
Businesses may now have to think about emphasising other benefits of free-lance working, such as flexibility, in order to continue to attract and retain staff or otherwise look to switch to more traditional employment arrangements. Now that they are being taxed at a similar level as employees, self-employed individuals may increasingly demand a level of employment rights, such as maternity and paternity pay, that employees receive.’

Nicholas Le Riche, Employment Partner

Public Affairs:

‘The importance of this Budget cannot be overstated. It will set the tone for Mrs May’s time as Prime Minister until at least 2020.
If she is to achieve anything beyond Brexit then this Budget needs to start telling the story of Theresa May as PM.
Knowing who are the winners and losers will show us what she wants to do with her time in office.
She also has the chance to head-off potential dangers to her if she and the Chancellor can deal with the growing rebellions over business rates, school spending and the NHS. With little room for manoeuvre they both need to show how fleet of foot they can be.’

Stuart Thomson, Head of Public Affairs

Private Wealth on the increase in probate fees:

‘It is very disappointing that the Ministry of Justice has decided to proceed with its proposed reform to the fees for grants of probate despite overwhelmingly the response to the consultation being negative. The concerns expressed about the difficulty in funding these fees, which need to be paid in addition to the funeral expenses and inheritance tax before the executors can access the deceased’s assets, seem to have been ignored. The fees are also disproportionate to the amount of work required by the Courts Service to issue a grant of probate.
The change is expected to come in during May 2017 and so leaves little time for those in the process of preparing a probate application to finalise and submit it, particularly if inheritance tax is payable, before the change takes effect.’

Elizabeth Neale, Private Wealth Partner

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