Streets Accountant’s analyse the Budget’s impact on business
Following George Osborne’s announcements last week, Streets Chartered Accountants in association with the Comet held a special Budget presentation to pick over the detail.
From the cross section of businesses at the event at The Novotel in Knebworth Park on Friday it would seem the announcements have left them feeling indifferent about the state of the economy and prospects for the year head.
While some announcements like the increase in personal allowances and the reduction in the rate of corporate tax were welcomed, changes to child benefit and an increase in fuel levy were less well received. So too were the freezing of personal allowances for pensioners, or ‘granny tax’.
James Pinchbeck, Streets marketing partner, said one of the biggest issues affecting both the local and national economy is confidence.
“With a sense that many businesses are either holding off investment or unsure as to the direction to take, the Budget can play a pivotal role in creating the confidence to stimulate enterprise. It is difficult to see if this has been the case, though what might be described as a neutral Budget might at least provide a greater sense of certainty.”
As is often the case with the Budget the devil is in the detail. Luckily delegates were able to benefit from a clear and concise interpretation from Streets’ tax partners, Richard Couchman and Paul Brophy. They not only covered the impact of the announcements made on Wednesday but they also provided a useful summary and insight into some of the changes previously announced but due to come into effect over the coming months.
Mr Pinchbeck said: “With many local enterprises, new starts and hive outs often dependent on external funding, then the expansion of the Enterprise Finance Guarantee Scheme and the Finance Partnership can only be good news for our seed corn enterprises and embryonic ventures.
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“For our budding young entrepreneurs it will be interesting to learn more the about student equivalents of enterprise loans. For Hertfordshire’s many small businesses that trade as a sole trader, or in partnership, the proposed changes to corporation tax make it increasingly financially beneficial and tax efficient to consider incorporation and trading as a limited liability company.
“For those husband and wife businesses it might be worth looking at income splitting - the spreading of income between two parties to help safeguard or protect entitlement to child benefit. Equally by decreasing income in real terms, both as a higher rate and non higher rate tax payer, it can be possible to maximise the overall financial rewards received. Such tactics include increasing pension contributions, switching investments to those that are subject to capital gains tax as opposed income tax, or simply deferring income.
“If you drive a company car it is a good time to review whether it is still as attractive option to have one, not least with increasing benefit in kind charges and pending fuel hikes in prices at the pumps.
“For Stevenage, being the location for many a business with new ideas and innovative new products then the proposed tax cuts on patents must help to stimulate creative ideas and hopefully see more of these turning into viable commercially opportunities. Supporting this too are the proposed tax incentives for investing in university research facilities and Research and Development Tax Credits.
“For the wider community it will be interesting to see the detail on, and the impact of, the proposed Get Britain Building Fund, which aims, along with the mortgage support initiative the right to buy scheme, to stimulate the construction industry and housing market.
“With the detail of the Budget announcements still hot off the press it is still early days to be able to comprehend and understand how it is likely to fully impact on businesses and individuals. We are sure though that many an accountant will be whiling away the hours looking at the impact the Budget has in store for their clients and how best to help them take advantage of the changes and or mitigate the tax burden. No doubt the game is afoot.”