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Commenting on the impact of today's Budget on UK businesses, Bill
Dodwell, tax partner at Deloitte, said:
“Overall, there are not too many significant changes for businesses,
which will be generally welcome. There are, however, a great number of
small changes and the Budget pack of materials is one of the largest
we've seen. The Treasury would help business (and HMRC) by reducing some
of this volume of change.
“On the whole, UK companies will not be pleased with the substance of
today's Budget. Today's new measures, combined with changes announced in
last year’s Budget, mean that businesses will pay an extra £2 billion a
year in tax from April. After last year's Budget, businesses were facing
an additional £1.4 billion tax bill following changes to capital
allowances. Now, the Government wants a further £600 million from them.
“Although badged as anti-avoidance, some of the measures add to business
costs in doing business internationally. They will be borne by a
relatively small number of larger enterprises with more complex tax
affairs.
“The widely-heralded Consultation Document on the Taxation of Foreign
Profits (measures covering how UK groups pay tax in respect of their
overseas subsidiaries and affiliates) has been deferred. This is
welcome, as it indicates that more work is being done by the Treasury on
this highly complex and important area. It is important that the UK's
tax regime encourages UK-headquartered groups, which protecting
appropriately the UK tax base.
“There will be a welcome for increases in Enterprise Investment Scheme
and Enterprise Management Incentive (share options for small, start-up
companies, often in the technology sector) limits to £500,000 pa and
£120,000 respectively, though EMI schemes are now limited to enterprises
of less than 250 employees.
“The transition to 18% flat rate capital gains tax following abolition
of business asset taper relief has, as expected been softened for many
taxpayers by the introduction of the Entrepreneurs relief, apparently
expected to benefit about 80,000 taxpayers. The introduction of the
£50,000 automatic first year allowance for capital expenditure
(excluding cars, but including long life assets) will be a helpful
simplification for many small businesses.”
Income shifting:
“Smaller businesses will be celebrating a minor victory with the
decision to delay new 'income shifting' legislation by a year, although
they will still be hoping for these rules to be permanently overturned
as they pose a significant burden and add to uncertainty.”
Non doms:
“The Government has responded positively to the consultation over these
controversial measures. We welcome the changes, including the exclusion
of minor children from the regime, the drafting of the tax in a way
aimed at securing a US tax offset, for US nationals and the removal of
offshore trusts, unless income or gains are brought into the UK. The
Government's assurance that it will not alter the rules adversely in
this Parliament and the next sets out the stable regime that many
sought.”
Environmental Taxes:
“The Government has started to set out a programme of tax measures
aimed at encouraging change. These include a potential 'plastic bag'
tax from 2009; an increase in fuel duty at 0.5p per litre over
inflation from 2010; increases in climate change levy, landfill tax
and aggregates duty and a new 'showroom tax' on the sale of new,
polluting, cars, with a low rate for low polluting vehicles.
However, all these measures will only apply in the future - and this
year's petrol duty increase has been deferred to October.” |
