Claire’s Column – A Spoonful Of Sugar…

Published on: 16 Mar, 2016
Updated on: 16 Mar, 2016

In this regular column – a must-read for all those interested in Guildford business – Claire Dee comments on today’s Chancellor’s Budget speech.

Claire Dee

In his eighth Budget, Chancellor George Osborne spoke confidently at length to a packed House of Commons.

And in true Mary Poppins style, he offered a bitter pill for some (stay in the EU) made all the more palatable by his tax on sugary drinks.

Mr Osborne began by revising down the UK’s growth forecast for the next five years, referencing the Office for Budget Responsibility’s warning there were significant risks to the UK economy if it were to exit Brussels. Ouch.

Then, to the delight of many, and even recognition this was a good thing from Labour’s Jeremy Corbyn, he announced the introduction of a new sugar levy on the soft drinks industry noting tax affects behaviour. From 2018, the sugar tax will arrive with the aim of tackling a growing obesity problem in the UK, particularly in children.

If you’ll excuse the pun: sweet.

Boost for SMEs

Aside from the politics, this was very much a Budget for small businesses. With a whole host of announcements, some designed to hit big business, and most to benefit small.

With a definite nod to the multinationals not paying their fair share of tax, the Chancellor revealed several avoidance and evasion measures with the hope of raising around £12 billion by 2020.

Giving him the all-important room to manoeuvre in a bid to help the small and medium-sized enterprises (SMEs), including:

Raising the annual threshold for small business tax relief from £6,000 to a maximum of £15,000.
Reducing the current headline rate of corporation tax from 20% to 17% by 2020.
Cutting the top rate of capital gains tax from 28% to 20% and the basic rate from 18% to 10%.
Abolishing Class 2 National Insurance Contributions for the self-employed.
Raising the threshold at which people pay 40% income tax to £45,000 in April 2017.
Raising the tax-free personal allowance to £11,500 in April 2017.
Raising the annual ISA limit from £15,240 to £20,000 and offering a brand new lifetime ISA for the under-40s with a government contribution of £1 for every £4 saved.

A number of moves which have been welcomed by the Institute of Directors (IoD).

Rob May, chairman of the Surrey branch of the IoD, said: “There was plenty in the Budget for small and medium-sized businesses. They will welcome measures including more relief on business rates and cuts to capital gains tax, and a further corporation tax reduction coming in a few years.

“Business leaders and workers alike will be pleased with increases to the income tax personal allowance and the higher rate thresholds next year, while the introduction of a lifetime ISA will be a big boost for young people who have been put off by the inflexibility of pensions.”

Praise for simplification

And finally, call me sentimental, but I was delighted to hear Mr Osborne namecheck and thank a past colleague of mine, John Whiting, for his help in unravelling the miles of red tape that exist in our modern-day tax system.

John Whiting is now tax director of the government’s Office of Tax Simplification and I couldn’t think of a better man for the job. When John and I worked together at PwC his knowledge of, and energy and passion for, tax simplification was insatiable and infectious. We had many a debate…!

Claire Dee runs her own communications consultancy near Guildford, and is an active member of the local business community including sitting on the Surrey Chambers of Commerce Board and the Institute of Directors Surrey Committee. To learn more visit www.clairedeecommunications.com