Lambert Chapman LLP’s Nigel Whittle comments on the budget

It can’t be easy being a Chancellor when you want to carry out lots of radical policies but are hamstrung by the politics of your own party and with the state of your inherited finances.  However, overall it seems to me that George Osborne recognises the problems that the business community face and has made it clear what he would like to see being done.  Some of this he has already implemented with the general reduction in corporation tax rates, increased entrepreneurs relief and improved research and development incentives and looking to simplify overly complex tax system in the U.K.  There is a long way to go before the Chancellor makes a real difference in the way this country is taxed and spends, but I do approve in the current direction of travel.

Lambert Chapman LLP’s Paul Short comments on the budget

As with every budget statement for the last 20 years I have fervently hoped that I would hear about an increase in the threshold at which companies have to pay more than the lower rate of corporation tax.

Surprise surprise.  The threshold still remains at £300,000 as it has been since the last century.  Really it should be something in excess of £1 million now.  It does mean that many expanding companies, looking to increase head count and looking to develop trade internationally, find that the marginal rate of corporation tax on profits in excess of £300,000 will now be 27.5% until profits meet £1.5 million.  Beyond that level the top rate of corporation tax of 26% will apply.  That’s quite an increase for companies.

It particularly hits companies which choose to set up business abroad and choose to operate with a foreign company.  This will be just the sort of companies you think we would want to encourage.  It may indeed be a while before the entity can start to generate good profits.  Unfortunately, in terms of UK tax, £300,000 small companies threshold is divided by two, because of the presence of this associated company.  It could mean that the UK home based company has a dramatic increase in its tax bill.  The application of the marginal rate rather than the lower rate to £150,000 of taxable profits amounts to extra tax of £11,250.  Set up another company abroad, also in a break even situation initially, and that will be another £3,750 of additional corporation tax for the home company.

Mike Carabine, head of our corporate tax department, believes that in due course we will finish up with just a single rate of corporation tax.  If that is pitched at 23% then that will mean extra corporation tax for companies in our constituency.

I have always maintained that governments, of either persuasion, really do not understand small business.

Lambert Chapman LLP’s Chris Harman comments on the budget

The global economic outlook is still bleak.  We have a large deficit.  Our Chancellor had to deliver a prudent Budget that also planned for our economic growth. 

I am pleased to see the reduction in the rates of Corporation Tax and the narrowing of the gap between the main rate and the rate applying to small profits.  I wonder if, one day, we will see just a single rate of Corporation Tax. 

The increase in Research & Development tax credits is welcome as too is the removal of some of the restrictions.  I expect to see more Companies qualifying for this valuable tax credit.  I have had experience of H M Revenue & Customs being difficult in allowing claims and hope their instructions from our Government will be to encourage R&D and not put hurdles in the way.

The increase in the limit from four years to eight years for Short Life Assets will benefit businesses.  Good record keeping is essential to make sure the Capital Allowance Pool and claims are correctly worked out.

For individuals the announcement of the consultation on the possible integration of income tax and National Insurance in the future was not a surprise.  The consultation process will take a while because of the complexities of the two systems.  There is currently ongoing consultation on the improvement of the operation of PAYE (on which one of my Partners and I submitted, independently, responses to HMRC) and I expect the Government wants to get that one out of the way before they move on to detailed consultation on the integration of tax and NIC.

Our businesses and its workers need the confidence our Government is supporting them and will give boosts not only in this Budget but in each one that follows.  I expect our Chancellor to keep a close eye on how his Budget stimulates our growth and if he needs to make changes will not be slow in doing so.