Chancellor George Osborne’s Budget speeches have by and large been pretty favourable for SME owners and managers. Having set out a stall early on as the “government for businesses”, the coalition sought to incentivise investment in companies, raise the tax breaks for those putting money into their companies and make hiring young staff less costly.
However, set against a backdrop of euro zone hysteria as Greece seeks to use the mandate given through Sunday’s referendum to renegotiate with European creditors, Osborne’s first speech before a majority government is expected to focus on the Conservative Party’s “long-term economic plan” of balancing the books.
Previous promises from Osborne and his party mean that we are unlikely to see VAT, national insurance or income tax go up in any way. Likewise, the government’s small but gradual cut in corporation tax has been in place for many years, so any u-turn there is unexpected.
What will be of benefit to business leaders up and down the country will be some kind of indication as to where taxes will go in the next five years, not just until Osborne picks up his little red briefcase in the Autumn Statement or next year’s Budget in March.
Businesses want to know that taxes will be levied fairly, in an accountable manner that reflects a company’s true performance. The diverted profits tax legislation, otherwise known as the Google Tax, has remained largely misunderstood when stood next to the government’s commitment to being open for business of any kind. Clarification on how it will be enforced, how companies can comply and why it is beneficial to those outside of the UK is needed.
Read more about the March Budget:
- George Osborne scraps tax return for individuals and businesses
- Sharing economy boosted with government usage and northern hubs
- The impact and implementation of new digital tax accounts
We might also hear a little bit more regarding the Northern Powerhouse. At the beginning of June, I wrote about my trip up north to visit FTSE 100 software company Sage, when I was exposed to its plans to be a catalyst for the Northern Powerhouse. This is another area that needs a bit more detail to generate the kind of local buzz and excitement that will be key in developing the north as an economic heavyweight. For now, it still seems like a bit of a buzz word – something to placate those calling for more powers at a city level.
On a more niche level, alterations are required Patent Box regime to make it compatible with a new approach set out by the Forum on Harmful Tax Practices.
Another subject to get a good outing on the rumour mill is the salary sacrifice system that allows employees to, in effect, maximise tax-free contributions to pensions by taking a haircut on pay. However, as pensions relief tax is widely expected to drop from its current 45 per cent perch, a decision may be made to remove salary sacrifice as a way of eliminating the move by some to get that relief back in another way.
It will be interesting to see the approach Osborne takes now that he doesn’t have to (semi) please the Liberal Democrat front benchers he was sat next to for five years. The business secretary is now a Conservative, in the shape of Sajid Javid, so are can we expect the duo to be more closely linked than Osborne and Vince Cable were?
He’s going to have to prove that promises made in the Conservative manifesto two months ago are going to be made good. The public sentiment that saw the party obtain a surprising majority at the polls needs to be maintained, and a sure fire way of preventing this would be to renege on pledges. On Wednesday we’ll see if it is more cut and cull than invest and infuse – but it’s likely we’ll see the former.
Share this story