This year, we’ve asked some of our members to share with us their thoughts on the budget: how it affects them and how it affects the businesses with which they work. Their views are their own. Today’s first post comes from Tony Down FCCA based in South Wales. Tony is also the current chair of the UK ACCA practitioners’ panel.
The Chancellor commenced his budget speech by stating that the Governments proposals ‘unashamedly [back] business’ and ‘reaffirmed our unwavering commitment to deal with Britain’s record debts.’ He ended his speech by saying: ‘This country borrowed its way into trouble, now we’re going to earn our way out.’
My hope was that this budget would provide business with the opportunity to increase sales, reduce costs, reduce burden on employers and increase the tax incentives for businesses to invest in capital expenditure.
A temporary reduction in the rate of VAT would have been helpful, making products and services for the end user cheaper to buy which would have had an effect all the way up the supply chain. However, the Government’s view is that lower income tax rates are more equitable and increase the spending power for individuals.
A further announcement that he made was in reference to the self-employed where, if their turnover for the tax year was less than £77,000, they could produce their accounts for self-assessment purposes using the cash basis. It will be interesting to see how this works in practice.
For companies with taxable profits of over £1,500,000, corporation tax from 1 April this year will reduce to 24%. The Small Companies Rate will remain at 20%. This will help reduce overall business costs but probably not by enough to encourage business leaders re-consider increasing recruitment.
Mr Osborne sought to address transport costs which inevitably contribute to high business costs and increased prices for the consumer. Vehicle Excise Duty for road hauliers will be frozen, while no further changes are planned to what has already been announced regarding fuel duty; duty, other than for hauliers, will rise by inflation only. We were all hoping that he would have been more generous especially in light of the significant increase in the cost of fuel.
However there was good news for the creative, aerospace and scientific industries. Proposals to extend the film tax credit to video, animation and high-end TV production industries.
For ten of the UK’s largest cities, the government is funding ultra fast broadband and WiFi. £50m will also be made available to Britain’s smaller cities. The government is also committing £100m of support, alongside the private sector for investment in new university research facilities.
A UK centre for aerodynamics will also be established in the UK. This will encourage innovation in aircraft design and commercialise new ideas.
Other good news for families: only those with an income in excess of £60,000 will lose child benefit altogether, although they will begin seeing a reduction for every £1 of earnings over £50,000.
Overall, I would have liked to have seen the chancellor being more ambitious to create demand within the economy. He could have achieved this with a temporary reduction in VAT and a reduction in fuel duty. I would have liked to have seen him encourage businesses to recruit by reducing the employer’s NIC contributions, and it would have been good to encourage businesses to invest in capital equipment by increasing capital allowances.
However, when dealing with what he termed, ‘Britain’s record debts’, no-one can expect him to give it all away.