Budget 2011: Too good to be true?

In the weeks running up to the Budget, the Chancellor declared that this would be a “Budget for Growth, Enterprise and Aspiration" – so was he right?

It was certainly aspirational as much of what George Osborne said today is about the future – but gut reaction was that even short term it was very positive – perhaps too good to be true?

Encouragement for business
There was much encouragement for businesses – the introduction of the Enterprise Zone Plan came as no surprise given that the Chancellor himself alluded to it a few weeks ago, and it could be more generous than speculated. The doubling of Entrepreneur’s Relief to £10m and the increase to R&D tax credit reliefs for SMEs are all very welcome announcements.

Other incentives for businesses and entrepreneurs include the extension of the Enterprise Investment Scheme, and we hope that the small print also relaxes and simplifies what is a hideous area fraught with traps.

Office of Tax Simplification
The recently formed Office of Tax Simplification had a big influence over this year’s Budget with many of the recommendations set out in their report being endorsed. Although changes are unlikely to be immediate, there are proposals for a radical overhaul of many parts of the tax system – not least income tax and National Insurance. What will now follow is a long consultative process throughout which we will be representing the views of our clients.

Personal allowances/National Insurance
The proposed increases in personal allowances and National Insurance were confirmed but will result in all but the lowest paid being worse off. Consumer spending has also been hit with the usual increases in duty but the ‘rabbit out of the hat’ had to be the news that not only has the planned fuel duty rise has been postponed, but it has been cut by 1p.

Tax avoidance
Combating tax avoidance continues to be a big focus for the Government. The disguised remuneration legislation has being confirmed as coming in from 6 April 2011 and we will need to analyse the small print to establish the extent to which they have listened to the representations made during the consultation period.

Conclusion
However, overall we can’t help but feel a little stunned that it was such a good news Budget, and we wonder where the catch is – no doubt somewhere buried in the small print which we are about to delve into! RSM Tenon