Jane Parry, Tax Partner, comments on today’s Autumn Budget announcements…
All in all this Budget was a bit of a damp squib as the Chancellor had no real room for manoeuvre – thanks mainly to the ongoing saga that is Brexit.
In my opinion, it actually threw up more questions than answers, which isn’t great for a Government that needs to promote a sense of stability in what are pretty turbulent times.
It’s positive that he recognised that frictionless trade is important but there’s nothing he can really do to address it right now, as everything is dependent on the outcomes of our negotiations with Europe. The challenge will be to ensure that we don’t drown in a sea of trade bureaucracy once we reach 29th March 2019.
I was pleased to hear him reassert his support for the Northern Powerhouse. However, much of the focus was on Greater Manchester but what about Lancashire and Cheshire who, just like Manchester, need long overdue investment in both connectivity and digital infrastructure? There was quite a bit of talk about cities but not much about towns.
On a more positive note, he resisted the urge to meddle in the pension tax rules which I welcomed. I also welcome the increased investment in training and growing relevant skills for the future. Finding skilled people is a huge challenge for many businesses and anything that helps to boost the supply of those people is good news.
For me, this Budget was missing some vital ingredients. Firstly, more effort is needed to reduce the bureaucracy faced by businesses and help them deal with the pressures that Brexit will bring in this regard. Also, instead of just increasing the main R&D tax credit to 12%, he could have flipped how it operates so it becomes a real time payment rather than retrospective claim. That simple switch would allow thousands of companies to put investment into R&D far more quickly as they would have the cash available.
Announcements like increasing the National Living Wage by 4.4% are great in theory and should really benefit lower paid workers, but it will put additional pressure on small businesses as a significant number of SMEs probably won’t be able to pass all of that new wage burden onto their own clients or customers.
Even though we knew there were never going to be any major shocks or giveaways I came away feeling pretty deflated; it all seemed a bit gloomy, one dimensional and pessimistic. The downgrading of the OBR forecasts goes against the success and growth stories that we are seeing with our clients every single day and I fear a weak Budget and a weak Government could make businesses and the general public feel jittery and ultimately drive down confidence needlessly.