By Richard Mannion, Director of National Tax at Smith & Williamson
We had been told by the media to expect a 'boring Budget', particularly bearing in mind that much of the headline news had been included in the Autumn Statement last December.
The ‘tom-toms’ were certainly quieter this time around than on previous occasions, with less leaking of news until the Evening Standard got ahead of itself. We did have Liam Fox calling for a capital gains tax holiday to kick start the economy, which left us wondering whether as a former cabinet minister he had the chancellor’s ear.
And then the day before the Budget the Treasury announced an extension to the childcare scheme to come in in Autumn 2015 (after the next Election). That immediately raised the question of what taxes would go up to pay for it.
In the event there was little in the way of new tax news in the Budget speech, but as always the devil is in the detail. The Overview of Tax Legislation itself contains 185 pages of proposals which are considered in this booklet.
With very little cash to give away, there was some good news for entrepreneurs and individuals alike.
Significant changes have taken place to assist home buyers to get onto and move up the property ladder, at least when the home is worth less than £600,000. These initiatives should provide an enormous fillip to home ownership and new build projects.
The headline measure on jobs announced by the chancellor was the introduction of an employers’ national insurance relief of £2,000 per year from 2014 for all businesses. This will help smaller businesses in particular and indeed as a result many will pay no employers’ national insurance at all.
There is also a simplification of corporation tax from 2015 when there will be a single 20% rate of corporation tax applying to all companies.
The one-off CGT exemption for a capital gain reinvested in a Seed EIS (SEIS) made in 2012/13 has been extended for 2013/14, but only to the extent of a maximum one-half of the gain. This will give a boost to SEIS, a relief that started slowly but is now beginning to take off.
On the other hand there were some worrying developments for businesses and individuals. There is to be a consultation on how members of LLPs are taxed which could result in yet more complications for firms to wrestle with. And proposals to restrict business property relief and agricultural property relief could result in potentially significant extra IHT liabilities for farmers and business owners in particular. I have a vision of farmers marching down Whitehall, with muck spreaders bringing up the rear.
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