Last week saw Gordon Brown’s eleventh and almost certainly final budget as Chancellor. After a number of budgets which were predictable to the point of being dull this one saw the announcement of changes which will have a significant impact on local businesses. So is this budget a winner for local business people or does the Treasury take the prize?

A straw poll of local business people at our recent Rotherham budget seminar showed that all those present felt that they personally would be worse off as a result of the budget and also that the budget had been bad news for their businesses. And this is despite the fact that the UK is currently experiencing an unprecedented period of growth and prosperity – the economy has now been growing for the last 58 consecutive quarters and this growth is forecast to continue.

So is the Budget really all bad news?
There was good news for large companies who have seen their tax rates cut from 30% to 28% from April 2008 and also for companies involved in research and development who have seen their tax relief increase. For income tax payers the cut in the basic rate to 20p from 2008/9 is very welcome as are the increases in ISA limits.

However there are also some negatives for local businesses. These include an increase in small company tax rates, up from 19% to 20% from April 2007 and then by an additional 1% in 2008 and 2009. The Industrial and Agricultural buildings allowances will be phased out and other changes to Capital Allowances will make it harder for local businesses to gain the same level of relief as they have been used to in the past.

Steven Watson, Allotts Principal Tax Manager said:
“There’s no doubt that this budget has been a winner for Gordon Brown. He’s gained some great publicity with his cut in the headline rate of income tax and has helped to enhance the UK’s reputation for international competitiveness by cutting tax for large companies. He’s also effectively boxed in the next Chancellor by announcing plans for the next four years. But for local businesses it seems unlikely that this budget will prove to be a winner.”

Tax has always been a challenging area for businesses and this is more true today than ever before. In fact the UK now has one of the most complex tax regimes in the world. If you feel that you need professional help to guide you through the tax maze and to get the best results for you and your business please do not hesitate to contact us on 01709 828400 in Rotherham or 01302 349218 in Doncaster.