Business owners are on tenterhooks in advance of tomorrow’s Budget, the first by new Chancellor Rachel Reeves.
Despite election campaign promises that tax rises would not affect ‘working people’, subsequent claims of the discovery of a £22bn black hole by the government suggest the nation’s finances are in a dire state. 
Ministers are making no bones about the challenges ahead – Prime Minister Sir Keir Starmer has already announced that “painful” decisions are coming.
So where could that pain be felt? Clare Boden, corporate tax expert for accountancy firm Haines Watts in Bristol, offers her views on what businesses and individuals might expect.
Clare, pictured, said: “The government has said that it won’t raise the main rate of Corporation Tax (CT), as well as NICs (National Insurance contributions), Income Tax or VAT.
“But that doesn’t mean the CT system won’t change at all. One measure could be to remove the small profits rate – currently 19% of profits under £50,000 – a potential challenge for the smallest businesses but potentially welcome for some, given the complexity around the associated companies rules. A general reduction of the main rate of CT would encourage growth.”
She said there could also be further reductions in Business Asset Disposal Relief (BADR), previously known as Entrepreneur’s Relief, which currently reduces the rate of CGT from 20% to 10% on disposals of businesses or business assets.
Changes could be around the limits on the lifetime gain that can benefit from the reduced CGT (Capital Gains Tax) rate, or maybe increasing the minimum shareholding requirement from the current, low-risk level of 5%.
“I wouldn’t be surprised if changes are made to the full expensing regime introduced in last year’s Budget,” Clare added.
“Current rules allow companies to claim 100% of capital allowances on qualifying plant and machinery investments, letting them write off the costs in one go and seeing taxes cut by 25% for every pound invested.
“The scheme is very generous and should encourage investment. However, given that it is currently unlimited we could well see the rules tweaked or limited.
“Another possibility is the removal or restriction of Inheritance Tax (IHT) reliefs, such as business relief which can stand at either 50% or 100% depending on the circumstances of the shareholding and asset ownership. Changes could be the introduction of a monetary limit, or the imposition of more stringent criteria.
“Higher taxes are rarely welcomed by the business community. However business owners can at least try and anticipate what’s coming down the pipe and do their best to prepare accordingly.”
Bristol Business News will have as-it-happens coverage of tomorrow’s Budget along with instant national and regional comment plus full analysis in this Friday’s e-bulletin.
