Final Spring Budget: ACCA’s views
Accountancy & Tax The final Spring Budget was met with mixed reactions from ACCA. Global head of tax at ACCA Chas Roy Chowdhury voices their views.
While it was great to see that the government listened to the concerns of the business community with regard to business rates and the upcoming rollout of Making Tax Digital (MTD), ACCA was concerned on Budget day itself when the Chancellor announced an increase in the NIC for the self-employed. We said immediately that this would be harmful for UK growth and entrepreneurship.
So we were pleased that the Chancellor almost a week after the Budget reversed the class-4 national insurance contributions (NICs) increase. We see this as a positive move for British businesses.
Clearly, the government listened to the concerns of the business community, ACCA included. As we outlined in our statement on the Spring Budget on the 8 March, these measures could have been harmful to British entrepreneurship and competitiveness.
Creating barriers for British small business is the last thing we want during a time when we are trying to encourage innovation and create a Britain that is ‘open for business’. Instead, we should be focussing on measures that improve the competitiveness of UK Plc, and of Britain as a place to work and locate a business.
If these proposals are revisited in this Parliament, I suggest that the government thinks carefully about measures to align the level of benefits received by self-employees in comparison to their employed counterparts before increasing taxes on the former.’
What has to be remembered is that self -employees are subject to a lower national insurance contribution (NIC) because they do not receive the same entitlements and benefits as their employed counterparts – such as holiday and sick leave. Before raising this tax, the government needs to think carefully about ways to align the level of benefits.
At a time when we are trying to encourage innovation and create a Britain that is ‘open for business’, we should not be creating barriers to entrepreneurship and self-employment.
Business rates relief welcome, but not enough
ACCA welcomed the news that the government has listened to the serious concerns of the business community around the upcoming revaluation, and has allocated reliefs accordingly. However, we are not sure that these measures will go far enough to address the pressures on our bricks and mortar small businesses. There is just not enough money in the relief fund (£300 million) for local authorities to significantly help hard-hit businesses in their community.
Making Tax Digital: a welcome change
It was also good to see that the government has listened to the concerns of ACCA, amongst others, about the undue burden on small business that MTD would create. We welcome the move to delay the implementation of MTD for one year, for businesses with turnover less than £83,000.However, we would encourage the government to continue with this carve-out indefinitely: excluding businesses within this threshold altogether as they are most impacted by the additional administrative burden that MTD filings would create.
The Chancellor’s reduction in the dividend allowance is a major policy u-turn in less than two years.
I would be concerned if this meant that the government is considering removing the allowance altogether when it was originally proposed as an offset for increases in dividend taxation. If it is removed altogether, the taxation on dividends should be reduced.’
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