The team at Hereford and Ludlow-based accountancy firm, Thorne Widgery have welcomed the Chancellor’s latest Budget speech, saying it offers a boost to companies and communities in recovery.
After almost two years of economic difficulty, the latest estimates from the Office of Budget Responsibility (OBR) show that the UK economy is growing faster than expected.
Nevertheless, many businesses and households are facing a winter cost crisis and so Rishi Sunak set out his plan to assist them.
For many high street businesses, the announcement of significant reforms to business rates couldn’t come at a better time. This will include a new 50 per cent discount (worth up to a maximum of £110,000) for companies in the retail, hospitality, and leisure sectors, which will last for one year.
Businesses will also benefit from an extension to the £1 million Annual Investment Allowance until the end of March 2023, which will support further investment in plant and machinery through Corporation Tax relief.
Daniel Crowther, CEO at Thorne Widgery, said: “Going into this Budget many businesses feared that they would experience further tax rises, but in the main, the measures outlined by Rishi Sunak will help some businesses.
“The autumn and winter are likely to prove difficult for businesses and households as they deal with rising costs and inflation. This Budget has provided some small giveaways that should cushion the blow.”
However, despite the many positive steps taken in the Budget, Thorne Widgery said that earlier announcements, such as an increase to Corporation Tax in 2023 and increases to National Insurance and dividend tax next year meant that businesses and their employees still face mounting costs.
The Budget also confirmed changes to R&D tax credits that will refocus support to innovations in the UK, restricting claims where R&D activities are performed overseas.
“Over the next few years, starting from April 2022, businesses will start to see their costs increase further due to the measures previously announced by the Government,” added Daniel.
“Owners and shareholders will also see their ability to draw income from their business squeezed thanks to the increase in dividend tax rates. Whilst this Budget’s attempts to address this increase in everyday costs, many organisations could still experience a financial struggle.”
Daniel added that many taxpayers would appreciate the fact that the Chancellor had avoided making headline changes to personal tax, with both Capital Gains Tax and Inheritance Tax largely left alone.
“Speculation had been growing that the Chancellor might come after wealthier taxpayers, but in this Budget, he has left personal taxation largely untouched, which should help people plan for the future,” added Daniel.
However, looking further ahead, Thorne Widgery said that businesses and individuals should remain cautious, as future Budgets could contain surprises that mean a larger tax bill.
“A big part of the Chancellor’s speech was re-affirming the Government’s commitment to fiscal responsibility. We cannot overlook that he said that ‘everyday spending must be paid through taxation’,” added Daniel.
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