aving flashed the obligatory smile outside Number 11, George Osborne announced pensioners would lose an average £83 from the removal of age-related income allowances, in what was immediately dubbed a ‘granny tax’.
The chancellor also announced what the newspapers called a ‘samosa tax’ or ‘hot chicken tax’ that means, from October, retailers selling any hot food will be forced to pay 20 per cent in VAT, unless it is fresh bread.
For better or worse it seems Osborne hasn’t found any loopholes to close in the fresh produce industry, but the unveiling of a £200 million increase to the £1 billion Business Finance Partnership could be good news for many. Under the scheme the government matches investments from the private sector to provide credit to medium-sized companies.
NFU president Peter Kendall said Osborne was right to focus on growth. “I was pleased to see measures that could create a more competitive business environment in the UK,” he said. “In particular, the chancellor’s ambition to increase UK exports over the next decade to £1 trillion should benefit farmers who are the backbone of a food and drink industry which constitutes our biggest manufacturing sector.”
Kendall was also pleased the chancellor said the National Planning Policy Framework (NPPF) that is due out this week will contain a commitment to permitting sustainable development. The NPPF and the review of the Habitats Directive could contribute to reducing the regulatory burden on farmers, “freeing them up to invest and making their businesses, and the industry as a whole, more competitive”, according to Kendall.
However, he said the Budget was a missed opportunity to introduce measures that might have helped farmers capitalise on the growing confidence that is evident in the industry.
“Changes to the tax treatment of farm reservoirs, for example, are crucial at a time when farmers need to prepare for scarcer water resources in some parts of the country, while a reversal of the decision to reduce the Annual Investment Allowance on plant and machinery to £25,000 would encourage farmers to invest in the sort of costly machinery needed on modern, productive farms.”
Osborne also decided not to stop the 3p rise in fuel duty planned for August in a move Kendall said would displease farmers because rural areas tend to suffer from higher fuel prices while the price of fuel used on-farm continues to rise dramatically.
The chancellor also confirmed plans to allow supermarkets to open all day on Sundays throughout the Olympics and Paralympics. But James Lowman, chief executive of the Association of Convenience Stores, said it was a “smugglers’ charter, pushing more customers away from legitimate retailers into the black economy.”
“This Budget is devastating for tens of thousands of small retail businesses across the UK. Sunday trading relaxation will cost small businesses more than £480m and wipes out any hopes local shops had for a sales boost from the Olympics. Imposing such a measure at the last minute without consultation is plain wrong,” he said. -
WHAT DOES THE BUDGET MEAN FOR YOU?
A number of key announcements for both individuals and businesses were made last week. Jeff Webber, a tax director with accountancy firm BDO LLP, reports.
Individuals
The headline measure was a reduction in the top rate of tax on income over £150,000 from 50 per cent to 45 per cent from
6 April 2013. Meanwhile, the standard personal allowance will be increased to £9,205 from 6 April 2013.
The restrictions to personal allowances for those aged 65 and over have been attacked. However, the rationale for the change, in view of the anticipated increase in the standard allowance to £10,000, is understandable.
Company car benefit charges continue to rise. The fuel benefit charge will also increase from 6 April 2012, which will affect NI contributions for employers and income tax for employees. However, the additional three per cent charge for diesel cars will be abolished from 6 April 2016.
Businesses
Corporation tax rates
In a surprise move, the main rate of corporation tax (for companies with profits over £1.5 million) will be 24 per cent from 1 April 2012 - an additional one per cent reduction on that previously announced. The rate will then be reduced to 23 per cent from 1 April 2013, and
22 per cent from 1 April 2014.
Capital allowances
As previously announced, the rates of annual writing down allowances are to be reduced from 1 April 2012, from 20 per cent to 18 per cent in the case of plant and machinery, and from 10 per cent to eight per cent in the case of long-life assets and integral features in buildings. The annual investment allowance will also be considerably reduced from £100,000 to £25,000.
Tax simplification for small businesses
The government proposes to allow small unincorporated businesses with a turnover of up to £77,000 to prepare accounts on a cash basis and use a simplified expenses system for some categories of expense. But the VAT registration threshold will be increased by more than the usual amount, from £73,000 to £77,000 from
1 April 2012.
Tax avoidance
Several measures have been announced to end particular schemes, some involving capital allowances, asset-backed contributions, pension schemes and contrived losses arising from property businesses and the use of post-cessation reliefs.
The government also intends to introduce new measures in 2013 to tackle avoidance through the use of personal service companies. In a broader measure, a General Anti-Abuse Rule will be introduced in Finance Bill 2013. This is designed to prevent tax avoidance through the use of any artificial or abusive scheme.
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