With less than an hour before Chancellor George Osborne reveals the contents of this year’s Budget, expectations are running high for some business-friendly measures to ease the plight on small and medium-sized firms.
Among the issues business organisations in the West want tackled is a planned reduction in the Annual Investment Allowance (AIA) from £100,000 to £25,000.
Chartered accountants body the ICAEW points out that real business investment has only grown by 1.1% in the last year, compared with the Office of Budget Responsibility’s forecast of over 8%.
Jon Blake, ICAEW regional director said: “At a time when businesses should be investing some of their reserves in their economic future, Government is cutting back on the allowances which encourage them to do so. That’s why we think the Chancellor should retain the Annual Investment Allowance and send a signal to businesses that they can feel a bit more confident about the economic outlook.
ICAEW is also calling on Government to take additional steps that will accelerate improvements in the levels of service that businesses receive from HMRC.
As one of the primary points of interface between business and the state, HMRC continues to struggle and is affecting businesses’ ability to ‘get on with the job’. Simple measures such as more use of email and quicker responses to postal queries could make a significant difference.
Mr Blake added: “Every extra hour that a small business spends dealing with HMRC is an hour that could be invested in growth. Poor levels of service at HMRC create a burden on businesses of all sizes, especially SMEs. Even HMRC has admitted that it does not have enough people with the right skills in the right place. Government must ensure that it gives HMRC the resources it needs to collect tax and support business.”
Rob Brown, tax director at the Bristol office of accountants BDO, said: "We would be very surprised if the Chancellor does not seek to accelerate tax simplification and introduce further measures to demonstrate his determination for the UK to be regarded as a business friendly location for entrepreneurs and global companies.
“Indeed, it will be very disappointing if he does not achieve this.”
Personal taxes for the top and bottom earners are likely to dominate the political fall out from today’s Budget.
The Chancellor is widely tipped to reduce the amount of money people can earn before they start paying tax but is also set to unveil a cut in the top rate of tax from 50p to 45p – however not for a year.
The Chancellor will say he is not giving the rich a net tax cut as money will be clawed back by reducing tax avoidance and raising property taxes.
However Labour will say the chancellor should be helping ordinary families instead.
