Wallace & Grommit meet Robin Hood in a give-and-take budget
This budget was widely acknowledged as the most-leaked ever, so for many businesses yesterday's announcements brought few surprises, writes Erika Jupe, tax partner at Osborne Clarke.
Despite that, there were some real boosts for South West businesses, particularly in the creative and high-tech sectors. Most significantly, the Chancellor pledged to keep Wallace and Grommit "exactly where they are," as he announced a boost for the creative industry, which will see one of the region's strongest sectors qualify for a new tax-relief targeted at video games, animation and high-end television productions. Modification of research and development tax credits will also help the region's innovators.
Encouraging business growth is a key target for our region, so it was good to see some measures announced to help achieve that. In particular, Bristol will benefit from the super-fast broadband and Wi-Fi promised to ten UK cities, while the South West's Local Enterprise Partnerships will get additional funding of £23 million.
The region's highest earners will cheer the widely trailed reduction in the upper rate for income tax from 50% to 45%, although the change will not come into effect until April 2013. This measure is intended to encourage more investment into the UK and will certainly help South West businesses in the battle for international talent.
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Businesses will also welcome the reduction in the corporation tax rate from 26% to 24% from April 2012. The rate will reduce to 22% by April 2014, giving the UK one of the lowest corporation tax rates in Europe, however, this will benefit the region's biggest and most profitable companies most.
Also on the minus side, the government announced a General Anti-Avoidance Rule. We think that the Chancellor would have helped businesses more through a root and branch simplification of one of the most complex tax systems in the world.
The Region's high-end estate agents will be disappointed by the 7% increase in Stamp Duty, and dismayed by what is effectively a 15% entry charge for the purchase of residential properties by companies.
This was in many ways one of the most politicised Budgets ever and it was certainly a mixed-bag for South West businesses. Some measures will provide a much-needed boost for the regions more established businesses. At the same time, though, many businesses will be feeling short-changed by a Budget, which ultimately does little to help struggling small and medium sized businesses. The silver lining is that when we receive our new tax statements we will find out exactly how our money is being spent. Just don't ask how much they will cost, though.