Budget 2016: Gloomy outlook ahead of the budget announcement
Ahead of the Chancellor, George Osborne’s budget announcement on Wednesday, we caught up with the panelists at our Budget Seminar to hear their views and expectations for this year’s budget announcement.
Simon Whittle, Chairman at Westgrove Group and panelist at Cowgill Holloway’s Expert View Budget 2016 Seminar, is skeptical that the announcement will bring good news:
“I believe there may be another round of budget cuts, following the shortage of them in the Autumn statement. The Chancellor may be bailed out slightly (again) by reduced costs for borrowing, leaving some cash for him to plug a few gaps left over from last year.
“There may be a movement toward more pension reforms, maybe not now, but at some time this term and I believe it will be along the lines of a flat rate for all – in terms of relief I would predict 25% across the board, irrespective of which tax band you earn in. However, due to the possibility of an EU membership referendum in the offing, I don’t think the Chancellor will risk upsetting his core support at this point.
“I’m hoping for some light at the end of the tunnel for business owners after the changes to dividend taxation recently, coupled with changes to capital gains tax over the last 16 months. I would like to see some form of differentiation between institutional investors’ and owner/managers of a business’s – SME or otherwise – dividend tax rules. As it stands, there is little benefit for owning a business in exchange for the wealth and taxes we create (and collect) and the risks that are always there when growing and running a business.
“I’m skeptical that I’ll be any happier come next Wednesday afternoon.”
Valerie Allen, MBE, Commercial Director at General Welding Supplies (NW) Ltd and panelist at Cowgill Holloway’s Expert View Budget 2016 Seminar, is concerned about the impact on business:
“My big prediction for this year’s budget is that fuel duty will increase. The price of oil had fallen so much over the last year – our fuel bills have fallen by a third – that I cannot see the Chancellor overlooking this.
“I have to admit that I am feeling rather nervous at the prospect of Brexit; currently, we received some funding for training from Europe that is fantastic for the growth of our business and personal development of our team members.
Stuart Stead, partner at Cowgill Holloway
“The changes to the property regime have affected a lot of our clients, not just those in construction but those who have invested in property as an alternative to pensions. To a lot of people the pensions regime is undesirable, as the rules continuously change and the incentives for saving become less attractive. The Government seem to believe that property investment is passive and therefore should be taxed at a higher rate. Those clients with multiple properties are being penalised due to the changes on allowable finance costs, the proposed additional rate of SDLT and the withdraw of wear and tear allowance.
The gains in property have been attributed to successive government’s inability to make good on building new homes. My clients would like to see some real commitment to the numbers of new homes that have already been announced but not delivered.
Lisa Wilson, partner at Cowgill Holloway
“What should have been an easy budget for George Osborne now looks decided precarious. Warnings in respect of his 2020 budget surplus being missed and the impact of a possible UK exit from the EU mean uncertain times for UK business and the pound. Although there have been some positive hints regarding the personal allowance increases and the tactical withdrawal from further pension changes, the rest of the news has been pretty gloomy for SME’s. Possible fuel duty increases, insurance premium tax and changes to the salary sacrifice regime, affecting the profitability of the company and the means to motivate the employees. Given the self-imposed handcuffs on the income tax, National Insurance and VAT regimes there will be little room for George Osborne to manoeuvre other than stealth taxes, continuing fiscal drag, and further public spending cuts.
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The information was correct at time of publishing but may now be out of date.