Budget 2016 – Tax Predictions

Prior to the Chancellor’s Budget Announcement on Wednesday 16th March, our Tax Partner, Alastair Wilson shares his predictions and wishes…

What we know we will get because the Government have been consulting upon changes:

  • New proposals for non-domestic rates (i.e. Business Rates)
  • New rules for tax relief on interest costs for large corporate groups which will restrict tax relief for many large groups
  • Final legislation and guidance on the additional charge on SDLT for second residential properties (i.e. additional charges on Buy to Let investments)
  • More detail on the Apprenticeship Levy, which is overly complicated and already looks like a stealth tax!

What we would like to see:

  • An extension of the “re-occupation relief” for bringing unoccupied retail premises back into use (it expires on 31 March 2016).
  • Better localised tax incentives to attract businesses to the North East of England – the Enterprise Zones we have in the North East are generally poorly utilised, poorly thought out and are not having the impact that we need. We have had EZ status on the banks of the Tyne for a period of years and many areas have not been used or are allocated for use in industries which might either never arrive (wind turbine assembly) or which may be in long term decline. What the North East needs is strategic use of EZ’s designed to support long term sustainable industries which are owned and controlled locally (so investment decisions can be made here) put which put us at the forefront of innovation in a range of sectors where we can be world leaders such as digital technologies.
  • Tax reliefs for companies who invest in other companies, like the “corporate venturing scheme” which existed until 2010. If we are to encourage growth in start-up and technology businesses in our region, allowing larger companies to get tax relief if they provide direct financial support would be a great accelerator of growth.
  • A cohesive strategy for our region which is driven by the needs of the businesses in our region that drive the economy. The Combined Authority and the LEPs are not having a positive effect on our region’s growth when we compare ourselves to the impact of, for example, Scottish Enterprise and the devolved powers which the Scottish Government has. Companies in our region need to have the ability to compete for inward investment with other regions in the UK (e.g. Scotland and Northern Ireland) who have significantly better thought out strategies for attracting inward investment.
  • A period of stability on pensions, with a commitment to a defined period in which there will be no changes to tax reliefs, tax free lump sums, salary sacrifice arrangements or any other of the existing mechanisms for administering corporate and individual pensions.

What we don’t want to see:

  • An overly localised and complex set of proposals for non-domestic rates (i.e. Business Rates) – businesses will not thank politicians for making business rates reliefs and incentives differ depending on where the business is situated (e.g. the cost of dealing with Business Rates will increase substantially for businesses if the rules are different depending on which local authority your premises are in).
  • A commitment from the Government that there will be “no changes in tax relief for pension contributions” but then instead the Government tinker with the pension tax free lump sum or salary sacrifice for pensions instead.
  • A budget which delivers benefits only in the form of long term infrastructure (or which classifies replacing ancient train rolling stock as a long term driver of growth).
  • A budget which produces lots of benefits for the North West Powerhouse rather than the Northern Powerhouse. Whilst George Osborne’s constituency may be in the North West, the Northern Powerhouse needs to provide a positive impact for the whole of the North, not just Manchester.

For further information or for tax advice, please contact Alastair Wilson.

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