“This was a Budget for David and Goliath. Small businesses benefitted, while big multinationals and their tax transparency came under scrutiny,” says Chris Bond, tax partner at accountancy and business advisory firm BDO LLP.
“Once again, the Chancellor overlooked the importance of mid-sized businesses in his plans to get the economy on a more sustainable footing.”
A fair, simple, certain tax environment?
When measured against what businesses wanted to see in this year’s Budget – fairness, simplicity and certainty – the Chancellor’s biggest fail was in simplicity.
Chris Bond adds: “Businesses are feeling strangled by red tape and shackled by the complexity of UK tax law. 55% of businesses we spoke to before the Budget wanted to see simplification of payroll taxes, specifically in the alignment of National Insurance and Income Tax. They will be disappointed by the lack of swift action here.”
On fairness the Chancellor introduced measures to target anti-avoidance by large multinationals, which will be welcomed by businesses and the public generally. And in terms of certainty, the corporate tax road map gives stability to the direction of travel with corporate taxes, reducing them to 17% by 2020.
Business rates
Bond added: “Small businesses will benefit the most from business rates reforms. Reform was well overdue and it was something that 40% of business leaders wanted change on, according to a recent poll.
“Raising the rateable property value to a permanent new limit of £15,000 will most definitely reduce the tax burden for small enterprises, while the move from Retail Price Index (RPI) to Consumer Price Index (CPI) is a step in the right direction too.
“It’s a shame the Chancellor didn’t take it one step further and commit to more frequent valuations to make business rates fairer and more reflective of economic conditions, but they have promised to issue a consultation paper this month which is a positive move.
“Small businesses also benefit from reductions in Stamp Duty Land Tax on commercial property valued at less than £250,000, a reduction in the top rate of capital gains tax from 28% to 20% and a broadening of the entrepreneurs’ relief rules for unquoted shares held for more than three years which results in a 10% capital gains tax rate.”
Multinationals
The bulk of the tax raids came from anti-avoidance measures aimed at large multinationals, which, along with other measures tackling evasion and avoidance, are expected to bring in £12bn additional taxes by 2020.
“Larger corporates and multi-nationals felt the brunt of the tax raising measures with restrictions on the use of losses, restrictions on interest deductions to 30% of UK profits as well as other anti-avoidance measures”, he said.