As the Chancellor of the Exchequer completes the delivery of his March 2016 Budget, and the business community take time to digest and understand the implications, James Crowter, Managing Director of Technology Management has a few initial thoughts himself on whether it’s a good or weak budget for firms.
“This budget largely gives the stability to mid-sized businesses that they really need. The cuts in corporation and capital gains tax will enable the quicker reinvestment needed to transform to the digital businesses that will thrive in or out of Europe and even on a global stage.
“UK business needs investment to improve productivity rather than just employing more people. Tax breaks will go some way to improve cashflow but are only one part of the solution. Investing in business processes as well as developing the skill sets of current employees and changing a mindset will prove invaluable in a volatile economy which awaits the outcome of Brexit and all the possible hurdles that will or won’t create.
“The corporation tax reduction is especially important as competing with European companies, especially from Ireland and the Netherlands at the moment puts us at a disadvantage currently. It does tempt you to start up in those countries rather than export from the UK. The currency fluctuations in recent weeks have made that especially appealing so this redresses that somewhat.
“I’m sure though that our food and beverage customers will not be paying a lot in ‘sugar tax’. Reward always drives behaviour and they will adapt quickly to preserve their market share while avoiding price hikes by revising their recipes to fit around the new legislation when the detail becomes clear. It’s great that this will benefit our children (and a lot of adults) but I hope George Osborne has not counted on it for his deficit reduction plans.
“The personal tax free allowances increasing at the basic and start of higher rate are nice as most employees tend to look at what they get to take home. There are an increasing number of senior professionals above £100k that lose their personal allowance completely by £120k that won’t be impressed by this however – that threshold has not changed since Gordon Brown introduced it and is starting to bite with more and more. If he’s not careful we will see some of those most skilled moving abroad because of the effective 66% tax rate on anything extra they earn. Overall though the tax system is too complex and one day he should simplify it but happy with what we got today.
“Businesses need confidence back in the economic arena. There’s always more that can be done to support businesses through the rough times but one has to be realistic that the Government’s purse can only stretch so far. Innovation and research and development need to score higher up the pecking order if growth is to be achieved. Technology enhancements to improve business processes need to be encouraged or even incentivised so firms invest but hopefully with the tax breaks, there will have a little more cash in the bank to enable them to do this.
“We await the EU Referendum and fingers crossed whatever the outcome, Britain’s prosperity regains momentum.”