The first Budget of a new Parliament is often the most harsh: the Government know that they will be in power for the next few years and don’t need to worry about pleasing the electorate, who tend to have short memories and should hopefully have forgotten about it by then… This allows them to produce a Budget that concentrates on policy. Added to the usual harshness of first Budgets is the fact that the Conservatives have been freed from the shackles of the Liberal Democrats and their greater emphasis on social considerations, and now have a free reign to put matters of the heart to one side.
Last year’s Summer Budget was no exception to the above: it was harsh for some (including for small companies such as Gander Tax Services!), but only as harsh as it needed to be to focus on their policies.
So what are their policies with regards to tax? From our experiences of providing taxation advice under the Coalition, it was a government for small businesses and entrepreneurs, whilst cracking down on the tax avoidance industry. This is still the case, but there is not so much to do in those areas: the tax boutique firms have been blown out of the water, whilst there is plenty of opportunity for saving tax if you are trading in the UK.
The emphasis now seems to be firmly on encouraging saving and promoting fairness, as stated throughout their documentation since winning the election. Fairness is, of course, subjective to an extent. My interpretation of their interpretation (!) is as follows: everyone needs to pull their weight in difficult economic times, particularly those at the very top, but not to the extent that people are discouraged from remaining in the UK, provided the latter are adding to the economy through trading and investing.
There is also the issue of simplification. As someone who regularly has to wade through legislation, I can confirm that there is a lot of it! This was mainly due to Mr Brown. The Coalition were making a good fist of reducing this through the Office of Tax Simplification and the Conservatives are continuing to do so (e.g. by removing the notional tax credit system for dividends).
There are plenty of opportunities to revisit your tax arrangements, particularly where you are a director-shareholder, if you have a property portfolio, you have non-dom status or you want to consider your pension position.
In our experience, there are also a lot of small businesses out there that are unaware of the plethora of tax reliefs available, such as the enterprise investment scheme, the EMI share option scheme, and entrepreneurs’ relief (which has its own traps and pitfalls – it’s not as straight forward as it seems).
It is therefore recommended that you seek our assistance on any of these matters; we will be glad to assist you.
Ben Gander, Tax Consultant