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Budget response - five-point "disappointment list" PDF Print E-mail
Thursday, 09 July 2015

Westcountry based Top 40 accountants, Bishop Fleming, have welcomed some measures in the Budget, but have a five-point "Disappointment List", and predict that 300 pages will be added to the tax-rules book.

Matthew Lee, Managing Partner at Bishop Fleming, said: "Many of George Osborne's announcements were good news for the region's owner-managed businesses, including the reduction in Corporation Tax, the freezing of fuel duty, confirmation of the region's transport investment, and the confirmation of a £200,000 annual investment allowance.

"However, there are five major points on which we were very disappointed", said Mr Lee.

    1    "Pensions 

Having already reduced the maximum pension pot to £1 million, Mr Osborne is now eroding tax relief on pension contributions.
This is at total variance with the Government's declared aim of getting more people to save for their retirement and is highly demotivating for higher earners.

    2    Business Rates 

Having promised a long overdue ‘root & branch' review of business rates, the Chancellor made no mention of Business Rates in his Budget statement. This will be a big disappointment to businesses of all sizes.

    3    Dividend payments 

The announcement of a new tax on dividends is unwelcome, bringing with it yet more complexity in calculating an individual's tax liability. The existing basis is simple to understand, but the new one will do little to raise additional income while making it difficult for people to understand what their liabilities will be.

    4    More - not less - tax complexity 

Like a succession of Chancellors, George Osborne has spoken about cutting tax complexity, but today's Budget seemed to ignore all the recommendations from his own ‘Office of Tax Simplification'.

Measures like the new living wage rules (adding a new age-tier of 25+), the new dividend rules, and the new pension contribution rules, will all add to the complexity of UK tax.

Right now, the rule-book has already grown to 6,000 pages: today's announcements will add at least 300 pages.

We have yet to see a 21st Century Chancellor deliver on tax simplification, and reduce the number of pages in that rule book.

In looking at reforms to the welfare system, why did he not tackle the poverty trap for those in receipt of Family Allowance who earn in excess of £50,000 where the marginal tax rate can be 65%?

    5    Tax evasion v avoidance & planning 

Mr Osborne opened his statement with the claim that he'll capture £5 billion from ‘tax evasion, avoidance, and planning'. Evasion is illegal: avoidance and planning are legal. Does the Chancellor understand the difference?

Today's Budget amends some of the avoidance and planning measures, like pension contributions and dividends, but does he really believe that taxpayers who plan their affairs are sitting on £billions of unpaid tax?

I heard nothing in the Budget to explain how he'll tackle the much bigger issue of international corporations that elude their fair share of tax."

(Source - Bishop Fleming Press Release)  


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