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Budget 2012: The business tax agenda

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19th Mar 2012
Partner Rebecca Benneyworth Training Consultants
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AccountingWEB tax editor Rebecca Benneyworth outlines what she thinks will top the business agenda when the Chancellor gives his Budget speech on Wednesday.

Budget 2012 is not expected to be a particularly a business-heavy Budget, but it is shaping up to spring a few surprises - happy ones, we hope - particularly with a potential focus on capital allowances.

  • Capital allowances - There’s likely to be a fair amount on capital allowances, simply because there have been various consultations that are coming to fruition. The capital allowance changes from two years ago to reduce rates will kick-in from April, but we might see further announcements, or even an on Annual Investment Allowance (AIA), for example by taking the qualifying figure from £25,000 back up to £50,000. With draft legislation in place there’s also likely to be changes to feed-in-tariffs, affecting assets such as photovoltaic panels.
     
  • Small business taxation and reporting - We can expect something in responseith the recent review conducted by the Office of Tax Simplification (OTS), with disincorporation relief looking a good bet. There could also be news around the proposals for a flat rate tax, and exemptions for very small companies from submitting traditional statutory accounts. This could worry SME advisers, as more people will start to think they don’t need the help of accountants.
     
  • National Insurance - Following recent lobbying from business groups, some retweaking could revitalise the NIC holiday to make it of more interest. Those hoping for more profound reforms will be crossing their fingers to hear news of IR35 and ideas to move forward on merging "the operation" of income tax and NIC.
     
  • Payroll and benefits - Real Time Information (RTI) for PAYE will top the agenda; with the regulations finalised and there might be more details on the RTI timetable and arrangements for small and mid-size companies.
     
  • Fuel duty - The 3.02p fuel duty due this January increase was deferred until August in the Chancellor's autumn statement, but can the government not afford to take it? On company cars the fuel scale benefit and VAT scale will be announced, but are unlikely to go down.
     
  • Corporation Tax - Rumours are spreading that the full rate of Corporation Tax might drop to 20%. This certainly has merit from a simplification point of view, but will anger small business lobbyists calling for a reduction in the small companies rate. One argument in favour of a single CT rate is that it won't penalise small companies with higher tax rates when they start to grow.
     
  • Business investment The previously announced Enterprise Zones will likely feature in the Chancellor’s speech, and we now have proposals for capital allowances and Enterprise Zones which were floated recently.
     
  • General Anti-Avoidance Rule (GAAR) - Following the recommendations of the Aaronson review last November, the GAAR will probably get a mention - perhaps a statement of position -  but it seems unlikey the government will move too quickly, as the GAAR will be controversial with accountants and tax advisers and those who are concerned about it's potential effect on very small businesses. For example, might a sole trader opting to incorporate, or "flipping" permanent private residence for CGT purposes be caught by the rule as currently mooted?
  • Small business lending - in unrelated news - but related to the overall Budget business agenda – the Treasury has finally launched the National Loan Guarantee Scheme (NLGS) offering cheaper credit to small companies. 

AccountingWEB will be closely covering Budget 2012 on Wednesday with a live blog and detailed analysis to follow. Register here to receive a copy of Rebecca Benneyworth's digest on Monday 26 March - and to enter the Sage-sponsored prize draw for an iPad 3.

AccountingWEB Budget 2012 resources - sponsored by Sage:

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By justsotax
19th Mar 2012 12:03

I note with interest the potential GAAR move,

combined with the potential for the government to ease the tax burden on those big businesses, along with the potential reduction in the 50p tax...it seems finally that we now know what direction the condems (got to be carfeul with that spelling!) are taking us in.

 

It seems Cameron/Clegg and the rest of the front bench millionaires are looking out for their own.  The rest of us are merely statistics that get in the way.   

 

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By david5541
19th Mar 2012 14:00

nic limits

i am still shocked that there has not been a move to abolish upper NIC limits(to be inline with tax)

doing this together with:

reducing the 50p rate to 45p

and abolishing higher rate relief for charitable donations and pension contributions

 

would be more politically acceptable since our chancellor is a "loophole" filler.

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Nigel Harris
By Nigel Harris
19th Mar 2012 14:20

Simplification would get my vote!

...but I don't see it happening any time soon. As for disincorporation relief, I'm not getting any demand from clients, and frankly I'm not sure what it would look like - or even if I'd need it - if we had it!

If the best the Office of Tax Simplification can come up with is simpler SME accounts, then they really don't have a clue what's happening on the ground with our clients! Still, keeping it complicated keeps us in work I suppose ...

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By Robert Lovell
21st Mar 2012 09:53

Budget economic predictions

 

The OBR growth forecast is expected to be in line with increasingly optimistic private sector forecasts ahead of George Osborne’s third Budget announcement. 

The Office for National Statistics (ONS) also revealed yesterday that inflation continued to fall in the last month – something that will be crucial to the economic recovery.

In February CPI inflation fell to 3.4% down from 3.6% in January, while Retail Prices Index (RPI) inflation - which includes mortgage interest payments - was 3.7% down from 3.9%.

Click here for a full range of economic predictions ahead of the Budget announcement.

This comes at a time when the government also announced a £20bn loan guarantee scheme offering cheaper credit to small companies, however many remain sceptical as to whether a 1% drop in rate will be enough to kick-start SME lending.

What are your economic predictions?

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