Middle income families to shoulder Budget burden again
Budget commentary from James Cowper, accountants and business advisers
George Osborne’s first ‘emergency’ Budget failed to throw up many surprises, says Thames Valley accountants and business advisers James Cowper, and, as with previous Budgets, asks middle income families to shoulder much of the financial burden.
Says Ian Miles, a partner and head of James Cowper’s Private Client team said: “There are no changes in policies that target the super-rich and plenty of measures to help those on lower incomes and vulnerable families. But it is those with middle incomes that will be hit the hardest.
“The increase in VAT to 20 per cent from 4 January will hit everyone, but those on middle incomes also lose their tax credits. They will not benefit from the changes announced to National Insurance or from the changes to income tax threshold. This middle income group that makes up the large proportion of the UK, will be particularly hard hit if they have modest share portfolios and make gains over the annual allowance.”
The business community has more reasons to cheer when compared to previous budgets. Chris Lee, a partner in James Cowper’s Business Tax team said: “The reductions in Corporation Tax will be particularly welcome as will the extension to capital gains tax entrepreneurs’ relief.
“The help offered to businesses outside of the London, East Anglia and the South East by way of assistance with National Insurance will be most welcome. However, small businesses wherever they are based all face the same problems; it is shame that George Osborne was not able to extend such help across the UK and into the Thames Valley. A small outpost in Hull might now be an attractive proposition for many businesses in the South East!
“The increase in VAT may lead to a decrease in consumer demand, particularly if manufacturers and retailers decide to pass on these increases. The £13bn expected to be raised over the next five years may quite quickly disappear.”
Ian concludes: “I had planned on watching tomorrow’s England game from the comfort and privacy of my living room; with duty on beer and wine held and cider dropped I will now pop into The Red Cow instead.”
Ian Miles, Partner, James Cowper LLP, Tel: +44 (0)1635 35255 or email imiles@jamescowper.co.uk
22.06.2010