The usual period of pre-Budget speculation was ended prematurely yesterday (26 November) when the Office for Budget Responsibility inadvertently published its report ahead of Chancellor Rachel Reeves’ statement.
As always, the legal profession had been primed and ready to assess the Chancellor’s plans, and with the details now confirmed, opinions are mixed on whether Reeves’ plans will hit the mark.
One particular area of interest for City lawyers has been the health of the stock market, and the budget included the announcement of a tax holiday that will exempt new London Stock Exchange listings from stamp duty for three years.
Latham & Watkins partner Mark Austin, who has been playing a leading role in efforts to reform the UK’s capital markets, welcomed the move. ‘It puts our money where our mouth is,’ he said. ‘London is now the least frictional listing regime in Europe after the reforms of the last five years,’ said Austin.
Others, however, believe the measure does not go far enough.
‘The stamp duty relief is a welcome measure, although further reform is needed to see a marked revival in UK listing activity,’ suggested Sidley Austin tax and M&A partner Jason Menzies.
Herbert Smith Freehills Kramer corporate partner Casey Dalton said that while the move will be welcomed by those eyeing a UK listing, it could also have inadvertent effects. ‘Like any deal offered to new customers only, it risks creating distortion and arguably unfairness for those companies and funds who have already listed and so will not benefit from this measure.’
‘Changes are more limited than feared’
The budget aims to raise £26bn by 2029-30, a large part of which will come from a freeze in personal tax thresholds, as well as changes to salary sacrifice for pension contributions which will mean the amount that is exempt from National Insurance contributions will be capped at £2,000 a year.
‘This could significantly reshape how much employers contribute and how much individuals save,’ said Charlotte Cartwright, a pensions partner at Eversheds Sutherland. ‘Employers may be forced to explore tax-efficient alternatives […] that could have knock-on effects on benefit packages and salary-based calculations like mortgages.’
‘The Budget ends months of speculation. While the changes are more limited than feared, some members may already have made irreversible decisions as a result of that uncertainty,’ she added.
Another key announcement in the budget concerned employee share schemes, with Enterprise Management Incentives (EMIs) – which enable smaller companies to make tax-efficient share options available to their employees – set to be extended to companies with up to 500 employees and/or assets of up to £120m, up from the current thresholds of 250 and £30m
‘This will allow many more employees to share in their employing company’s growth journey, better aligning their interests with those of the wider shareholder base in driving towards a successful exit, and in the process freeing up cash for the company that might otherwise have been spent on cash incentives,’ said Oliver Walker, a tax partner at Weil Gotshal & Manges.
‘The government is acknowledging that reform is required to encourage talent into the UK and to reinvest in the UK’s entrepreneurial ecosystem,’ added Hayden Bailey, head of private client and tax at Boodle Hatfield.
Michael Carter, head of incentives at Osborne Clarke described the change as ‘very good news’ and said that EMIs are ‘one of the most effective tools for attracting and keeping talent.’
However, Carter struck a note of caution about the potential long-term effects of the cap for salary sacrifice pensions: ‘Ensuring that short-term revenue priorities do not inadvertently discourage future pension saving will be an important balance for policymakers to strike.’
Earlier this year
Yen Sum (pictured), the global chair of Latham’s private capital practice, says the expansion of its CLO capabilities is the latest step in a 
CLLS chair and former Simmons & Simmons senior partner Colin Passmore (pictured) had been hopeful that the government would listen to the concerns raised by the industry, and said that he was ‘very, very pleased’ by the news.
‘Ultimately, bribery is bad for business,’ says Sidley London white collar partner Sara George (pictured) about why US President Donald Trump’s move earlier this year to halt prosecutions under the Foreign Corrupt Practices Act could hinder rather than help companies. 
A raft of legislative changes from the Economic Crime and Transparent Act 2023 has created new sources of work. ‘We’ve seen a real uptick in compliance work coming out of the “failure to prevent fraud” offence (FTPF),’ says Joanna Dimmock (pictured), who joined Dentons from Paul Hastings in February, before pointing out that ‘it will be interesting to see how quickly that first prosecution comes to court.’ 
Utilising firmwide platforms has become increasingly important for maintaining activity, as Latham & Watkins partner Pamela Reddy (pictured) explains. ‘We have really deep relationships with corporate counsel – if they have an issue, they’ll pick up the phone to their trusted adviser.’ In her view, these ties generate enforcement work with agencies such as the SFO or the CPS, but also filler work, such as due diligence for major deals.
‘The SFO has lawyers, accountants and investigators working [together] for the prosecutors – you should have the same for the defence,’ Sprenger (pictured) says. 
