Martin Gurney, tax partner of accountancy firm Haines Watts Swindon said this was a ‘steady as we go’ Budget with no eye catching changes..
Martin Gurney, tax partner at accountancy firm, Haines Watts Swindon
Some highlights for business owners and directors to consider include:
R & D tax credits
The R & D tax credits for large companies will increase from 11% to 12% from 1st January 2018. More importantly, the budget for R & D tax claims will be increased by a further £2.3 billion.
Martin said: “This means all companies should focus their efforts on considering what, if any, aspects of their activities qualify for this valuable relief.
“Given R & D limits are set by the EU, post Brexit there may be a Brexit R & D dividend as the UK seeks to establish its position at the forefront of technological change.”
Whispered changes to the VAT registration threshold failed to materialise, with the threshold remaining at £85,000 for the next two years.
Martin added: “This is a welcome relief for small businesses who would have faced additional paperwork and real costs. Watch this space in two years’ time though, where we expect the threshold to be reduced significantly.”
The Chancellor announced the axing of the staircase tax which affected thousands of small businesses occupying split workplaces.
In respect of business rates, the Chancellor has sought to slow the rate of increase of these rates and have more regular revaluations, in order to avoid steep rises.
It seems the Chancellor has responded to small business concerns on these points.
Dominic Bourquin, corporate tax partner with MHA Monahans, said: “Nobody could accuse the Chancellor of setting the world alight. But perhaps we should at least be grateful most of us haven’t had our fingers burned with this budget.”
His highlights include:
“Good news for aspirational young house owners is stamp duty on houses costing up to £300,000 is being abolished for first time buyers with immediate effect. Also buyers in high cost areas, such as London and Oxford, won’t pay stamp duty on the first £300,000 of a purchase up to half a million pounds.”
“Personal allowances will rise by £350 to £11,850 in April 2018, and the higher rate threshold will go up to £46,350 – an increase of £1,350 per annum.
The national living wage will rise by 33p per hour to £7.83 – good news for lower paid workers, though a pressure on employers who may not be able to pass the 4.4 per cent wage increase on to customers – and enabling timely access to Universal Credit makes absolute sense.”
“Business rates are, of course, a bugbear and by switching from using the Retail Price Index (RPI) measurement of inflation to the Consumer Price Index (CPI) by April 2018 – two years earlier than originally planned – he will reduce an unpopular fixed cost to businesses to some extent.
“One announcement that is of particular interest is about digital economy royalties that relate to UK sales but paid to low-tax jurisdictions – the so called Google or Amazon tax.
“It’s more of a statement of intent to make them subject to income tax – this step will only rise around £200m a year – but it signals a new direction in a ramped-up tax avoidance clampdown.”
Stephanie Rickaby, of Sunflower Accounts, of Calne, looked at the commitment to electric cars. As a small business owner, she’s just invested in one herself.
Stephanie Rickaby, Sunflower Accounts
“The question for businesses is whether or not it is worth investing in company cars?
“It can be if the vehicle Co2 emissions are under 75g/km for new and unused vehicles. The company can claim 100% first year allowance of the cost paid for the vehicle against profits.
“The employee will probably have a benefit in kind charge as a percentage of the vehicle list price. This is a little unclear as there have been mixed messages around this and the Chancellor wasn’t entirely clear around this either.”
For example if a vehicle costs £30,000:
< 50g/km CO2 – nine per cent.
51 – 75g/km CO2 – 13 per cent.
*The company will receive £5,700 of corporation tax relief (19% of £30K)
*The employee may still have to pay tax on a benefit of £2,700 ( 9% of £30,000). As a basic rate tax payer this will mean an annual tax charge of £540.
*The company will also have to pay 13.9% Class 1A national insurance on the benefit – £375
Sharon Omer-Kaye, office managing partner at RSM in Swindon said the Chancellor had little choice but to opt for a Budget with a whimper.
‘With the Chancellor under such intense political and fiscal pressure – and with his personal future in doubt – it was difficult to know whether today’s Statement would go with a bang or a whimper. But with the OBR reducing its growth forecast from 2 per cent to 1.5 per cent for the coming year, the Chancellor had little choice.”
Her highlights included:
“It is hoped the review of ‘land banking’ by developers will also speed up much needed residential development but the jury is out on whether these measures will be more successful than others which have not delivered.”
‘The centrepiece was a review looking at how our tax system addresses the digital economy.
‘Existing tax rules largely date back to the early 20th century and don’t reflect how digital businesses currently generate revenues across multiple jurisdictions often without significant physical presence.
‘What’s interesting is the UK is seeing itself as a thought leader, diverging from the international approach by proposing new solutions for taxing businesses that derive most of their value from user activity on their platforms, for example social media companies.”
Tax evasion & avoidance
‘Today’s Statement also outlined measures to raise an additional £4.8bn over the next five years through the continued drive against tax evasion and avoidance. This will be supported by a £300m investment in new HMRC resource –people and technology – to make the existing measures stick.”
Ian Larrard, Director, Swindon & Wiltshire Initiative, Business West, said Swindon and Wiltshire was ‘left out’ of the Budget with investment plans for cities and other regions.
Ian Larrard, Director, Swindon & Wiltshire Initiative
His highlights included:
Investment in the tech sector
He said: “Perhaps the most positive message from Government for Swindon in particular is its commitment to a raft of measures to improve education, skills and the digital economy.
“The Chancellor said he wanted a new tech business to start every half an hour in Britain. If such an ambition were to become a reality Swindon could benefit tremendously.
“Home to one of the largest high-tech companies in the world, in a prime location on the M4 high-tech corridor and with a burgeoning entrepreneurial community aided by developments such as the Carriageworks, Swindon is well and truly geared up to take advantage of the digital age.
“Working with employers on the apprenticeship levy, pledging extra support for FE colleges to implement T-Levels and a push on maths are all a step in the right direction that could have a direct benefit on youth unemployment. Plans to work hand in hand with industry to get more computer scientists in schools, could also help give local education providers a much-needed boost.