UK ‘tax day’ will signal long-term government policy, experts say

Last week the Treasury said it will simultaneously publish a number of consultations relating to tax policy on March 23 — a day being dubbed in Whitehall as “tax day”.

Jesse Norman, financial secretary to the Treasury, confirmed the “small but potentially useful reform” in a letter to MPs on the Treasury select committee.

Norman said: “The goal of making these announcements separately to the Budget, but still all on a single day, is to give a range of important but less high profile measures greater visibility among, and opportunity for scrutiny by, parliamentary colleagues, tax professionals and other stakeholders.”

Several of the consultations will relate to the government’s 10-year tax administration strategy, he added, which is aimed at improving the resilience and effectiveness of the UK’s tax system.

However, tax professionals said the break from the tradition could also give Rishi Sunak, the chancellor, an opportunity to signal his intent on tax changes — including potential tax rises further in the future — outside the crowded format of Budget day.

George Bull of RSM, an accountancy firm, said the development “comes at a time when the chancellor is under enormous pressure over the immediate and medium-term direction of tax policy”.

Anita Monteith, tax lead and senior policy adviser at the Institute of Chartered Accountants of England and Wales, said she expected the consultations to focus more on revenue generating measures. “We all know the country is going to need more money,” she said.

Melissa Geiger, head of tax policy at KPMG, said she was expecting to be busier on March 23 than Budget day on March 3. “The consultations will set the agenda for the autumn. [The chancellor is] signalling what’s going to come,” she added.

Climate change policy is likely to be one area that could see new consultations announced, she said.

Amanda Tickel, head of tax policy at Deloitte, also predicted consultations on how to tax carbon while creating incentives for green energy innovation. The UK will be hosting the United Nations COP 26 international climate talks in November, which she noted will be around the time of the Autumn Statement.

Tickel also thought there could be consultations on capital gains tax, which was recently the subject of a review commissioned by the chancellor.

“After the Budget, we expect a second report from the Office of Tax Simplification on CGT. The eventual outcome could be increases to capital gains tax by aligning rates more closely to income tax or restricting the range and value of exemptions available,” she said.

Helen Thornley, technical officer at the Association of Taxation Technicians, a professional body, agreed there was “scope to look at changes to CGT” on March 23. She also thought there could be consultations on “making tax digital”, the government’s digital tax filing initiative, and how to improve the administration of the tax system.

Publishing tax consultations after the Budget would also buy the government time to assess the public’s appetite for possible changes.

Chris Sanger, head of tax policy at EY, said: “[The three-week] window may allow the government to gauge the reactions to the high-level messages and hints given by the chancellor at the despatch box, and potentially to change the content of the consultations,” he said.

The idea of a “tax day” was first publicly raised by Norman when he gave evidence to the Treasury select committee on January 18.

Then, he told MPs: “We are thinking about looking at whether we might publish more of these consultations and other ancillary documents separately to the Budget, in a separate tax day, in order to give them more profile.

“It is sometimes suggested that the Budget has an effect like Mount Etna: it throws everything else into shadow and dominates everything else.”

The Treasury said in a statement last week: “Announcements which have implications to the government’s finances, that need to be captured in the Office for Budget Responsibility’s economic and fiscal outlook, and announcements of measures to be legislated in the finance bill, will be made on Budget day in the normal way.”