From rescue to reform, but little evidence of recovery
George Osborne’s second Budget is well motivated and introduces some welcome micro-measures, but does little to hide a worrying downward forecast on growth and a concerning inflationary picture, says Thames Valley and South Coast accountants and business advisers James Cowper
Chris Lee, a partner in the Business Tax team at James Cowper said: “The Budget intends to help businesses and individuals, but for all George Osborne’s huffing and puffing it does little to disguise an increasingly gloomy economic picture, which sees growth falling to 1.7 per cent this year and high inflation.”
Despite a slower growing economy there are measures that individuals in the Thames Valley and on the South Coast will welcome. The increase in personal tax allowances to £8,105 by April 2012 will help many low and middle income families, and higher rate tax payers will be relieved to hear that the 50 per cent rate will not be made permanent.
Ian Miles, a partner and head of James Cowper’s Private Client team said: “The reduction in fuel duty and the delay in this year’s planned four pence increase is good news. Changes to the Fuel Duty Escalator will mean that in rising markets vehicle owners will have some protection.”
Big businesses will welcome the falling rate of Corporation Tax from 28 per cent to 26 per cent this year, and then by one per cent each year until it falls to 23 per cent. But small businesses, often cited as the life-blood of Britain PLC, will be disappointed that changes to the Small Business Rate of 21 per cent will not fall further than the one per cent (to 20 per cent) previously announced.
Chris adds: “Businesses both large and small may find however that the decrease in corporate tax rates will be offset by the hike in Employers’ National Insurance rates of one per cent which takes effect from 6 April this year which will increase costs for businesses employing staff earning over £21,000. This is likely to be of particular concern to businesses in the Thames Valley and on the South Coast.”
Inheritance tax, the perennial Budget favourite, also came under George Osborne’s spotlight. Those who gift 10 per cent of their estate to charity will, in return, receive a 10 per cent reduction on the 40 per cent IHT rate on the remainder of their estate.
Thames Valley science and technology community will welcome the news of a £100 million capital investment programme. The Isis Neutron Source at Harwell in Oxford will receive £10 million to develop three new instruments that can probe the structure of matter.
Sharon Bedford, a partner in James Cowper’s Oxford office said: “This £10million investment is good news for Harwell and for the wider technology community in Oxford. The technology community will also welcome further improvements to R&D tax credits, which increase to 225 per cent by 2012.”
Chris Lee, Partner, James Cowper LLP, Tel +44 (0)118 9590261 or email clee@jamescowper.co.uk
23.03.11