RSM Tenon Budget Predictions

An enterprising budget?
Last week the Prime Minister said that enterprise would be the key theme of the Budget and that it would be “the most pro-growth that this country had seen for a generation”. Encouraging words – but what might the Chancellor actually do on 23 March to make this aspiration a reality? Here are some of our thoughts:

Corporation tax rates
Last year the Chancellor announced a phased reduction in the main rate of corporation tax, cutting the rate by 1% each year to a final rate of 24% in 2014/15. Will he stick to this timetable or will he be tempted to go for bigger cuts sooner?

Enterprise zones
The Prime Minister announced that there would be 10 new enterprise zones. What tax breaks are going to be available? The enterprise zones of a generation ago allowed 100 per cent write off for tax on virtually all expenditure on buildings machinery and plant. Will relief in these new zones be as generous? And where will the zones be located – will they be in places where companies actually want to do business?

Tax reliefs for investment
What will happen outside enterprise zones to relief for capital expenditure? And what about relief for research and development? At one time there was a fear that this would disappear completely. We know that some form of relief will be retained but there may well be changes to the regime to target it more effectively.

Tax regime for small business
Small businesses have suffered over recent years because of the government’s roller coaster approach to tax. The coalition has asked the newly-created Office of Tax Simplification to look at the whole area of small business taxation and come up with recommendations for a long term stable tax regime. The interim report has just been published and we can expect some comments on it from the Chancellor.

Action point
Don’t forget that employer’s NIC goes up to 13.8 per cent from 6 April. If you are intending to pay bonuses in the next few weeks you might want to consider bringing them forward to before 6 April in order to avoid this higher NIC charge.