Autumn Statement 2013: What can businesses expect?
As part of our preview of Autumn Statement 2013, David Bennett, tax partner at Moore and Smalley offers his thoughts on what government will do to help business.
As the UK economy starts to grow again, Mr Osborne will be counting on extra tax revenues to reduce the budget deficit. Big tax giveaways are therefore out of the question.
Osborne has already announced reductions in the main rate of corporation tax, from the current 23% to 21% in April 2014 and 20% in April 2015. The small company rate is 20% and likely to remain at that level, so that by April 2015, we can expect a single rate of tax. I expect him to keep to his plan.
Companies who have developed patented inventions now qualify for a lower rate of tax, virtually halving the tax due on qualifying profits. It was reported recently that the ‘Patent Box’ regime infringed EU rules, but in fact only a couple of minor tweaks will be needed to repair the damage. The scheme as a whole is expected to continue.
Last year saw the introduction of a new type of employee share incentive scheme, offering shares exempt from CGT in exchange for giving up certain statutory rights. But as it currently stands, the scheme is somewhat unattractive, as the free shares carry an up front income tax charge. For the scheme to gain popularity, it will need an overhaul, and the sooner the better.
Osborne may seek to encourage employment, by increasing the ‘employment allowance’ announced last year. This currently offers an NIC saving of £2,000 to employers, starting in April 2014. A further increase, perhaps focused on SMEs, would be popular.
Tax simplification is a phrase often bandied about in Autumn Statements, but the efforts of the Office of Tax Simplification have been heavily outweighed by the reams of new legislation introduced by this government. Harmonising income tax and national insurance has been put on the ‘too difficult’ pile, but it would be nice if, for example, the meaning of ‘earnings’ was the same for income tax as for national insurance! The fact that it isn’t is an example of why our tax system is in dire need of reform.