The Chancellor’s latest Budget has been branded a “whisper” by top 40 accountants Bishop Fleming.
Fearful of upsetting voters ahead of the EU Referendum, George Osborne’s headline tax measures were almost inaudible, as he tip-toed through the Budget, claimed the firm.
The personal tax allowance will increase to £11,500 from April 2017, giving a further tax boost to low income earners. Those on higher incomes will now be able to earn up to £45,000 from that date before having to pay 40% income tax.
Savers will have a new annual ISA allowance from April 2017 of £20,000, as well as a new Lifetime ISA of up to £4,000 for any adult under 40. This could be the precursor for an ISA pension in the future.
Bishop Fleming welcomed the 8% cut in Capital Gains Tax (CGT), which last year raised more for the Treasury than Inheritance Tax. The reduction will not apply, however, to sales of residential property – a further attack on landlords, claimed the firm.
Corporation Tax got a mention in that the rate will reduce from the current 20% to 17% by 2020, which will be welcomed by business owners. Though there will also be further crackdowns on corporate tax avoidance and the use of personal service companies.
Change to stamp duty for commercial property. From midnight tonight it will be banded at 0% up to £150,000, 2% above that to £250,000 and then 5% on any amount above that.
Redundancy payments will attract National Insurance from April 2018. The Chancellor called this a tax avoidance measure.
Two new tax free allowances of £1,000 each for micro business that use the internet were announced to help avoid unnecessary form filing. Small businesses will also be helped with reduced business rates. Some businesses will now pay no business rates at all.
Bishop Fleming partner, Andrew Browne, commented: “Apart from welcome reduction in the rate of CGT and corporation tax, there was nothing major in the Budget. The Chancellor preferred instead to continue his tinkering.”
Mr Browne continued: “George Osborne had properly boxed himself in with what he could do with the economy, due to his self-imposed and legally binding duty to deliver a Budget surplus by 2020, and rate locks on income tax, VAT and National Insurance. He had to be more creative in how he raised revenue, so he hopes to gather more from new anti-avoidance measures.”
“With pension tax changes placed on the back burner for now, Osborne's room for manoeuvre had been further restricted,” he added.
The Bishop Fleming partner also noted that most businesses had been braced for an increase in petrol prices, “but having frozen fuel duty yet again there was a tangible sigh of relief,” he said.
According to Mr Browne: “Scrapping Class 2 National Insurance for the self-employed from April 2018 is a worrying event, as this will give the Chancellor the chance to increase Class 4 NI from 9% to 12% to bring the self-employed into line with employees. Class 2 NI buys the self-employed welfare benefits, so scrapping it allows him to raise Class 4 by the 3% and give these benefits in return – a simple tax raising measure he is yet to announce.”