Advice vital on tax changes

FENELLA MARTIN-REDMAN, tax partner at Baker Tilly’s East Anglia office, looks at how the coalition Government is planning to tax us

WHILE Parliament might have expected the House of Commons to be the venue for the announcement of important changes in government policy, the recent Liberal Democrat and Conservative party conferences have provided rich seams of proposals which are being trailed for public reaction and subsequent modification before being presented to our elected representatives.

There are three key areas where there is particular room for comment:

n Child Benefit: Rumours of a tax break for married couples (and presumably those in registered civil partnerships, too) seem an odd response to criticisms that the denial of Child Benefit for higher rate tax payers will prejudice stay-at-home parents with high-earning spouses.

It does, of course, emphasise that exact and exacting database matching will be required to ensure that Child Benefit is restricted as intended by the Government. Most of those who follow the news or who have had direct contact with government agencies will understand that they do not exactly have a distinguished record in using databases to their greatest effect.

n Universal credit: This brings us to the question of the universal credit. First reactions are that this is a welcome measure, especially if it can be designed in such a way that the sharp edges in the existing credit and benefit system are removed and the “poverty trap” eliminated.

At the time of writing, proposals are sketchy. However, it does seem clear that this will represent a massive IT project for the Government. Naturally, the usual caveats apply.

n Enterprise allowance: A grant of up to �2,000 to help those who have been employed for six months or more to create new businesses sounds like a great initiative. The Conservatives clearly think so because they are expecting this to create 10,000 new businesses a year.

If the enterprise allowance is to be more than a “tide you over” payment and is to foster sustainable businesses, then the Government must recognise that new businesses are about more than cash.

I hope that the allowance will come with a package of advice on the practicalities of starting up one’s own business, including all the NIC, Income Tax, VAT and public liability insurance issues which go with it.

Likewise, it is crucial for owners of start-up businesses to recognise the vital role that professional businesses advisers can play in the future success of their undertaking.

At Baker Tilly East Anglia we have in-house experts who can advise businesses and individuals across all areas of tax. For further information on the above and other corporate and personal tax issues, please do contact us on 01284 763311 or by e-mail at fenella.martin-redman@bakertilly.co.uk .