Budget 2013: Chancellor needs to grow confidence before he tackles economy
- Credit: PA
LIKE the weather, businesses are continuing to battle through a bitter period with the hope of brighter times still a long way ahead, says tax expert Robert leggett.
Speaking ahead of today’s Budget, Robert Leggett, corporate tax partner at Ensors Chartered Accountants, said: “As we approach George Osborne’s fourth Budget as Chancellor, I can’t help thinking that the recent weather reflects the economy rather well; every time it looks like spring may be here, another cold snap comes in to thwart our hopes.
“So what can we hope for in the Budget that will help business growth, and what do we already know?
“The main rate of Corporation Tax for next year has already been set; down again from 24% to 23%, and expected to fall again in 2014 to 22%.”
But, Mr Leggett added: “I think further changes to the small company’s rate (currently 20%) are unlikely at this point. Lowering Corporation Tax attracts inward investment, but does little to help small businesses who are struggling to make profits. It also fails to assist the thousands of small, unincorporated businesses.”
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And those businesses looking to expand are also being offered a helping hand, because from January 1 the Annual Investment Allowance is being increased, allowing businesses to spend up to £250,000 on qualifying plant and machinery and get full tax relief.
Mr Leggett said: “This two-year temporary increase from £25,000, should ensure businesses accelerate their capital investment plans. The shame is that the relief had only been cut from £100,000 in April 2012, and continuous tinkering is causing confusion.”
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Turning his attention to workers, Mr Leggett said: “Expect the Budget to bring more detail on the plans to allow company employees to swap their employment rights for company shares. Probably a political red herring, with little in it of real benefit.
“But what the Chancellor really needs to deliver for growth is some confidence.
“Consumers need confidence if they are to spend their money. The entrepreneur, of whatever size, needs confidence to invest and grow their business. To do this he needs a system which supports him on an on-going basis, not just at particular key points in the business life-cycle. This means a bolder look at the system of income tax, National Insurance and benefits.
“I fear that the Chancellor does not have enough room for manoeuvre, or political will, to be able to instil the confidence we need.”