“Our initial view is that this years Budget was quite full given that the Chancellor didn’t really have a lot of room to manoeuvre, given the Governments stated aim of signalling major law changes.
Todays Budget was generally good news for business. In particular the headline change if you like was a reduction in the corporate tax rate down to 26 percent this year instead of 27 percent as originally announced and the overall reduction down to 23 percent rather than 24 percent from 2014. These changes will make the UK have the lowest corporate tax rate of the G7, assuming of course that the other countries don’t follow suit.
There have also been several changes to help smaller businesses and start ups. For example the R&D credit has been increased to 200 percent for this year, 225 percent for next year for small businesses and they are having various changes to the Enterprise Investment scheme and to entrepreneurial relief, and the entrepreneurial relief there has been a doubling of the lifetime limit from £5m to £10m.
Turning to the large business its very much a split between the industries that we love and the industries that we love to hate. On the favoured industry side its really been Manufacturing and Construction that have done well out of it. On the Manufacturing side the patent box regime has been confirmed, no details on what it will look like but a confirmation that it will come in. And on the Construction side there have been various changes and for example for a company buying a portfolio of properties stamp duty will be paid now on the average price rather than the total price.
In the love to hate category, unfortunately the Banks have been hit again with the third change to the banking levy in three years sorry in several months. We don’t yet know what that change will be but of course there does have to be a concern that the Banks are a bit of an easy target and eventually we will get to the position where UK Banks are uncompetitive compared to the rest of the world. So that’s one to watch for.
Joining the Banks in the unfavoured group is the Oil Industry and here we are seeing some increases to a supplementary charge for North Sea profits.
That’s really it on the business side, but looking at the personal tax side again the emphasis is on changes to encourage UK investment. So in addition to entrepreneurial relief etc we have seen some changes to the non-domicile rules so that where a non-domicile brings their profits into the UK to invest in UK business then the remittance charge won’t apply. Other than that there haven’t been many changes on the personal tax side and they have been very much focused around non-resident non-domicile rather than standard UK tax payers.
Probably the other one major change in this years Budget is the announcement to combine the NIC and income tax regime. We don’t yet know what that will look like, the intention is to consult on this and it is of course an extremely complicated area so given that its likely to be several years before we do actually see what that looks like. So its very much one to watch this space and see what happens.
But all in all its been an interesting Budget there have been more changes than we maybe expected, some of them unannounced and many of them actually needing more details still to come before we can really assess whether this Budget is truly a reforming Budget.”
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