2010 Live Budget Blog from ACCA

Hello, and welcome to ACCA's live blog for the UK's 2010 Budget.

The chancellor will be making his Budget statement at 1230 GMT on Wednesday and our live blog will begin at 1200 GMT. Providing us with their thoughts and analysis of what the chancellor is announcing are: ACCA's head of tax, Chas Roy-Chowdhury; our SME policy adviser, Manos Schizas; and our technical advisory team, headed by Glenn Collins.

Updates will appear in the comments section of the blog, so make sure you regularly update the page. You can follow the comments section in an RSS feed too by clicking on the orange button below.

Comments

[Admin]

All the Official Budget documents can be found on the Treasury website, here:

http://www.hm-treasury.gov.uk/budget2010_documents.htm

[Admin]

Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“So close to the election and with so little room to manoeuvre with the public finances, this has been a bit of a phoney budget. The real changes will come after the election”

[Admin]

Manos Schizas, ACCA SME Policy Advisor, says:

"Overall, this Budget has been a relatively positive package for enterprise"

[Admin]

What would the Conservatives have done? - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“The Conservatives would probably have done a few things differently. There would have been neither the NIC rise nor the 50% rate. There could have been a few changes to VAT too, with it rising to 19%. Ken Clarke was keen in 1997 to see gas and electric VAT go to the standard rate, so this could have changed too

"The Conservatives will not be displeased with some of the pre-announced tax changes. This isn’t because they agree with them, but because the Chancellor will be the one taking the flak from the electorate, while they can get credit down the line for reversing them if they’re elected”

[Admin]

No changes to Corporation Tax - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“I didn’t expect any changes here, although I did think that if there were going to be any budget ‘surprises’ they were going to happen here”

[Admin]

On the Glover Review - Manos Schizas, ACCA SME Policy Advisor, says:

"I'm happy the Chancellor mentioned the Glover Review, but I'd like to have heard more detail.

"Glover was an independent review on how to increase SMEs’ share of public procurement contracts but things haven’t moved very fast since it concluded. Worse still, Government departments are no longer subject to the Office of Government Commerce’s procurement capability reviews, which would’ve kept them on their toes. Instead, they are now allowed to self-assess, which I’m sure is very convenient for them!”

[Admin]

On the doubling of the CGT allowance for entrepreneurs - Manos Schizas, ACCA SME Policy Advisor, says:

"The extra CGT relief was a nice surprise in today's Budget"

[Admin]

On Stamp Duty changes (or lack of them) - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

"The Chancellor still hasn't changed the way Stamp Duty works. The second you go £1 over the £250,000 you're clobbered by the full rate. The Duty should be progressive, like income tax"

[Admin]

On the Green Investment Bank - ACCA's Sustainability Advisor, Henning Drager, says:

“A Green Investment/Infrastructure Bank (GIB) is a welcome initiative. GIB will provide Government backed security for private investors to match and hopefully increase investment by taking a medium to long term return on investment/planning horizon”

However the concern is that the stated £2billion falls way short of a recent Ernest & Young estimate which puts the amount of total clean energy and infrastructure investment required by 2025 will be £200bn if the UK is to reach its energy goals”

[Admin]

On tax evasion plans - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“Tax havens are always going to take a bashing from the Chancellor, but it’s something of a sideshow. With so many more pressing problems for the nation’s finances, it really is frustrating that the Chancellor is wasting time on an area with so little impact on the economy

“The UK receives a significant level of business from offshore jurisdictions, but action by the Chancellor regarding tax havens could threaten this. This is odd as much of the tax evasion which might have been going on through these locations has probably mostly stopped

“Tax havens had no real part to play in any of our current financial problems. They’re just a convenient whipping boy for the UK and other Governments

“A focus on tax havens is a distraction from real issues that affect families throughout the UK. It’s just dodging the big questions”

[Admin]

The Chancellor brings up Tax evasion - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“As I thought, the Chancellor is making a fuss about tax avoidance this year. It’s something of a soft target”

[Admin]

Skills funding - Manos Schizas, ACCA SME Policy Advisor, says:

“The Government has done a lot of work on skills in the past few years, and were right to extend skills funding to smaller businesses as a first response to the recession. There are plenty of vocational qualifications, receiving hundreds of millions in funding, whose net economic benefit for learners is zero or negative. Some of these funds could be shifted into skills training for those who have just started or are looking to start their own business. People like this saved one in six net jobs lost during the worst of the recession. With the right skills they can do even more in the recovery.”

[Admin]

Green Business - Manos Schizas, ACCA SME Policy Advisor, says:

“The Chancellor needs to look beyond green taxes to offer real help to the businesses that can make a difference. In addition to improving access to finance, real help would include improving access to the £220bn public procurement market for innovative, green SMEs. Half of all government procurement tenders are supposed to be green by the end of this year; if small businesses aren’t given a fair chance to compete the Government could end up getting terrible value for money.”

[Admin]

No changes to CGT - Manos Schizas, ACCA SME Policy Advisor, says:

“There had been murmurings of the Chancellor equalising Capital Gains Tax to Income Tax. Doing this would have been an absolute disaster. In fact, it was so unpopular with small business stakeholders that the 2007 proposals had to be severely watered down idea when the Private Equity industry was raking it in

“If CGT had gone up by a considerable amount, then the Government could have kissed their ‘new industries’ rhetoric goodbye!

“It’s good news that there’s been no change”

[Admin]

Business Rates cut - Manos Schizas, ACCA SME Policy Advisor, says:

"On the back of a spike in inflation last year, business rate rises, which are tied to inflation, were deferred to help small businesses. With inflation spiking again in early 2010, it’s great to see that Rates are being cut this year”

[Admin]

On the new lending agreements between Govt and state-owned banks - Manos Schizas, ACCA SME Policy Advisor, says:

"I am always puzzled when the Government and the part-nationalised banks announce lending targets, especially for small businesses. Do HMT or BIS - or the banks for that matter - know how much debt the small business sector in this country is fundamentally good for? Or how much debt it can use in a profitable and sustainable manner? I doubt that. If they don't, then they should forget about lending targets and stick to proven commercial practices."

"Then there is demand, which is rising but is still really weak. Without solid demand, these targets are downright dangerous. Think about it: promising to lend more to small businesses can only mean one of three things: 1) relaxing lending criteria, which could lead to bad debt, 2) encouraging more businesses to apply for loans, which could lead to mis-selling, or 3) increasing the size of the average loan, which could lead to both."

"There are cases of market failure in small business banking, we have said this many times. We applauded when the EFG was established. We're supportive of the BPSS. But we also have to admit that there was too much easy money out there before the recession. Why do we want to return to that? Right now, banks need to recapitalise. Small businesses need to improve the quality of information they provide to them, and improve the management of internal funds and cashflow."

[Admin]

On the NIC increase - Glenn Collins, ACCA Head of Advisory Services, says:

"This was the least favoured option in a recent ACCA poll. Only 5% supported this measure as part of the Government's plan to cut the deficit. These employment changes occur in a year that sees major changes and new rule for employers; penalties for late payment of taxes, Agency workers directive, Equality bill and time off for training. An expensive year for employers"

[Admin]

Glenn Collins, ACCA Head of Advisory Services, says:

"Going by the pre-announced changes, an individual earning £110,000 will face an increase of 6% tax this year"

[Admin]

On the Chancellor's decision to not change pre-existing tax plans - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“I didn’t expect there to be any major new tax rises announced this budget as the Government already announced £19bn of tax rises at the PBR. We already knew about the 50% tax band and the pensions restrictions for those tax payers from 2011 and for £100k earners the loss of their personal allowance and the National Insurance Contribution rise in 2011

“We knew the NIC rise was coming, but I’m disappointed that it’s been confirmed. This kind of rise will hurt businesses just as they’re beginning to recover from recession”

[Admin]

As the Chancellor announces he has no plans to scrap the 2011 NIC increase - Manos Schizas, ACCA SME Policy Advisor, says:

“We knew that the rise was coming, but I really cannot oppose it strongly enough. The rise is essentially a further tax on job creation at a time when we should be encouraging small businesses to take on new employees and hold on to existing ones."

[Admin]

'Sin taxes' go up - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“The ‘Sin Taxes’ were always going to go up. They go up every year and are a very easy way to generate extra revenue for state coffers”

[Admin]

On tax rises for the richest - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“Some of the changes made by the Government recently should only be temporary. I’d like to see the planned National Insurance Contribution increase from 2011 scrapped and confirmation that the 50% tax rate will be reversed as soon as public finances allow. We need to help boost the UK’s global competitiveness to help the recovery”

[Admin]

On cuts - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“I didn’t expect to see any major budget cuts detailed in this budget. We know that the Government predicted £38bn of cuts at the PBR, but we still don’t know what they want cut”

[Admin]

Changes to the ISA limit - Glenn Collins, ACCA Head of Advisory Services, says:

"The increase to £10,200 with half in cash already announced was good news for savers. Good news that ISA limits will keep pace with inflation"

[Admin]

Stamp Duty allowance doubled to £250k but paid for with increase in duty for bigger homes - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“This is welcome news. Abolition of stamp duty on house sales of up to £250,000 can help to move the market which is still sluggish in places. However, the duty increase on bigger properties to pay for it is the beginning of a slippery slope to more increases"

[Admin]

As the Chancellor brings up tax credits - ACCA's Simon Wood, Advisory Services Team, says:

"Although noble in its intentions, the CTC and WTC system is jaw-droppingly confusing and full of potential traps for the unwary. I don’t think there is a person in the land who would disagree that the system is incredibly complex, inefficient and in need of a major “back to the drawing board” revamp. Bear in mind that the majority of recipients will be lower-income, unrepresented taxpayers. How are they supposed to comprehend the system which breaks most tax advisers into a sweat?"

[Admin]

As the Chancellor talks about low unemployment - Manos Schizas, ACCA SME Policy Advisor, says:

"Although recent figures showed that unemployment has fallen marginally, few expect this to remain the case in the medium term. Besides, employment is now at its lowest level since 2006. People are simply dropping out of the job market”

[Admin]

The Chancellor decides not to implement a Bank Tax - Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“There should be no bank tax without global agreement. We should not export the UK banking industry and its jobs by going it alone. One off 'windfall' taxes like this are rarely a good idea, as they are arbitrary and retrospective, making them an unsound basis for stable and consistent tax law that this country needs. There is a possibility that banks would also find a way of passing this cost onto consumers.

Additionally, they target consequences not causes of a flawed regime. The excess profits have been caused by a lack of competition in the banking sector and the lack of regulation to prevent the build-up of huge monolithic banks which are too big to fail - international action to deal with that would be better than a tax.”

[Admin]

Chancellor announces £2.5bn package for SMEs - Manos Schizas, ACCA SME Policy Advisor, says:

“The Government should take a leaf out of the US’ book and launch a scheme to help SMEs increase exports. With the pound at a historical low, they have a very good chance to help SMEs export the UK out of trouble. However, as the economy recovers, both wages and the pound will rise and this window of opportunity will close.”

[Admin]

Manos Schizas, ACCA SME Policy Advisor, says:

"The best thing that Alistair Darling could do at this Budget is announce that NIC levels are being lowered, not raised”

[Admin]

ACCA's Simon Wood, Advisory Services Team

"The Government has gone on record as stating that small and medium-sized owner-managed businesses are the key to the UK’s recovery. What businesses could really do with is a Budget that delivers certainty and makes the UK a commercially attractive base from which to do business."

[Admin]

Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“It sounds like a strange sentence, but it would be a big surprise if there were any big surprises!”

[Admin]

Manos Schizas, ACCA SME Policy Advisor, says:

“Although the Government has been boosted by an undershooting of its earlier public borrowing targets, I’m hopeful that this won’t be turned into an electoral war chest. This isn’t like loose change turning up in the sofa, you know; it’s more like finding out the bailiff doesn’t need to repossess the sofa just yet.”

“It would be good to see some detail of the cuts that the Chancellor needs to make. This level of detail would be encouraging for businesses, and would send a positive signal to foreign investors.”

[Admin]

Chas Roy-Chowdhury, ACCA’s Head of Taxation, says:

“Having this budget now doesn’t really make any sense. With an election approaching in a few weeks’ time, there is every chance that these proposals will be over ridden by an ‘emergency’ Conservative budget after the election”

“There are serious concerns over the transparency of this budget; it’s all a bit of a rush. With the Finance Bill to be presented very quickly, straight after a full length budget, there are serious questions to be answered about the transparency, openness, and democratic nature of this budget”

“In 2005 some two-thirds of the 300 pages plus Finance Bill was guillotined through in four hours. Therefore everyone needs to be on their toes and make sure that there are only a limited number of measures which are passed in the revised Finance Bill this time”

[Admin]

Welcome everyone to our live blog for the Budget. In the House they're going through PMQs for the next half hour, but our experts will be giving you their pre-Budget thoughts before the Chancellor gets up at 1230 GMT.

[Admin]

Our live coverage of the Budget will begin in half an hour's time. We look forward to you joining us.

[Admin]

ACCA will be live tweeting during the Budget too, via @ACCA_SME, @ACCATaxation, and @ACCANews

[Admin]

The big Budget news from this morning includes:

- The Chancellor has reached a deal with the state-owned banks to lend up to £100bn to customers this year (The Times)

- 'Draconian' new penalties for 'tax dodgers' could be announced by the Chancellor tomorrow (Daily Mail)

- Inflation has fallen back to 3% from the 14-month high of 3.5%

[Admin]

Comments from Chas, Manos, Glenn, and others will be appearing here before and during the Budget on Wednesday 24th March.