Yahoo Finance City urges Hammond to avoid Budget surprises amid fears over hard Brexit
The City's top lobby group has urged Chancellor Philip Hammond to steer clear of any surprises in his forthcoming Budget given the uncertainty the sector already faces around Brexit.
Joining the growing list of industry groups to set out their wish lists ahead of November 22, the chief executive of TheCityUK has urged the Chancellor to rule out tax increases or complicated new rules so that the sector can focus on ways to cushion the impact of Brexit.
The lack of clarity around a deal for when Britain leaves the EU in March 2019 has already forced some City firms to implement their Brexit contingency plans, assuming a hard Brexit or 'cliff-edge' scenario which would see firms lose their right to service EU clients overnight.
In the last few days alone a number of financial institutions, including the world's biggest clearing house LCH Group and banking giant HSBC have warned of the dangers of an empty Brexit transition deal.
"The Budget is undeniably overshadowed by the uncertainty of Brexit – businesses are already navigating uncertain waters – they don’t need any further choppiness," said TheCityUK's chief executive Miles Celic.
The lobby group, which represents around 2.2m people working in UK financial services, said the country's tax system had become "increasingly unpredictable and less stable in recent years" due to the introduction of corporate loss restrictions and increases to Insurance Premium Tax, which applies to all general insurance products apart from travel insurance.
"Against the backdrop of Brexit uncertainty, further instability across corporate and personal tax regimes could undermine the UK’s attractiveness to international investors at a critical time," it said.
Mr Celic outlined these concerns in a letter to Mr Hammond, noting that "the volume and pace of tax change in the last few years has been costly to the financial and related professional services industry".
In his three-page letter sent last month, he said that tax can seriously impact on financial services businesses and "on the UK as a suitable location for their headquarters, business hubs, and holding companies".
"This was already the case before the EU referendum, and now the UK and its financial and related professional services businesses cannot afford for tax to balance location decisions away from the UK."
Britain's financial services industry, which is the country's largest tax payer, is already concerned that businesses will start moving people out of the country unless a post-Brexit deal is made clear soon.
