Autumn Statement 2015 – Tax

Our Tax Partner, Alastair Wilson shares what he’d like to see for the North East economy in Wednesday’s Autumn Statement…

The North East has seen some significant positives in the last year, such as rapid increases in new businesses being created and new jobs as a consequence. There have been sectors of our economy which have been visibly buoyant over the last twelve months, such as property & construction, the hospitality and leisure sector and the digital economy.

However, we have also seen some significant setbacks, such as businesses such as SSI closing, Air Products stalling and the significant downturn in the offshore industry which is starting to have a widespread impact within the North East engineering sector.

From a North East perspective, I’d love to see the following in the Autumn Statement:

  • New sources of larger grant funding which are easy to access and which are aimed at the manufacturing and digital sectors
  • Tax relief for investment in “commercial infrastructure” where that leads to trades in manufacturing, the digital or hospitality sectors (akin to a more focused version of Industrial Buildings Allowances)
  • Employers NIC reliefs for all “new” employees, not just those under the age of 21 (or apprentices under 25) as we have now. With our ageing workforce, why shouldn’t a business be given a tax break to hire a 55 year old?
  • An extension to the Retail Relief for business rates beyond March 2016. This relief really helps a wide range of businesses and should be extended
  • A corporate version of EIS – akin to the old Corporate Venturing Scheme, which nowadays could be used to encourage companies to unlock some of the cash which has been hoarded and encourage them to “crowdfund” businesses in our region

However, clearly that is all relatively unlikely and what we will be most likely to get is:

  • Further work on anti avoidance measures and making cross border taxation of large companies more effective
  • Outcomes of recent consultations on employment taxes, pensions and corporate tax matters affecting large businesses
  • A possible increase in the rate of capital gains on “non trading” assets which can’t benefit from Entrepreneurs Relief

And one thing which is likely to happen, but I wish wouldn’t happen, is George Osborne’s plan to devolve setting of business rates to local councils.    

As a tax adviser, we see how difficult it is for companies to deal with the impact of different tax regimes between countries. It’s complex enough for “UK taxation” that companies in the North East now have to deal with what are effectively different Stamp Duty Land Tax and Income Tax regimes in Scotland and England.

Devolving business rates will make each council set their own business rates policies which will then be applied within that council’s boundaries. Handling those new policies will therefore fall to teams within each council.

Whilst this sounds great from a perspective of creating competitive arrangements between councils for new investment, it will mean that businesses will have to become business rates experts to understand the impact of different regimes and policies between councils.

We regularly help our clients understand whether councils have correctly applied business rates to their properties. Our experience of dealing with local councils on business rates is that the local teams understand the calculation methodology for the rate, but not the legislation or policies which apply. Our experience of dealing with council business rates teams is that they regularly implement business rates legislation incorrectly.

Devolving business rates will make this position more uncertain and so will add to complexity for many businesses and I’d be happier if this measure wasn’t taken forward for the sake of clarity.

I await the Autumn Statement with interest!

To discuss any of these points in more detail, please contact Alastair Wilson on 0191 285 0321 or email alastair.wilson@taitwalker.co.uk

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