Managing director of accountancy and tax advice firm Brookson, Martin Hesketh, has given his reaction to Tuesday’s Budget.
Mr Hesketh stated: “The challenge facing George Osborne in the coalition’s first Budget announcement has been, to say the least, extensive. It was no surprise, with over £100 billion to re-coup, unemployment levels still on the increase and the post-recession economy more fragile than ever, the Chancellor positioned the Budget, in his opening statement, as an unavoidable one.”
With regards to the self-employed, the chancellor did commit to supporting UK enterprise, however cautiously. Corporation tax was reduced for small businesses and a commitment to review IR35 has already been given. Mr Hesketh does point out, though, that the extensive public sector cuts will have an effect on contractors currently working on public sector contracts and those looking for future work.
IR35 was not specifically mentioned in the Budget but Mr Hesketh believes that the review of the contentious tax rule will be placed within the overall review of Corporation Tax. Hesketh believes this is likely to take place over five years. The government is likely to consult with such professional bodies as PCG and APSCo to name but a few although clearer details on the review process will be made public in the autumn.
One of the most startling announcements in the Budget was the VAT rise from 17.5% to 20%. This will come into effect on 4th January 2011. The Chancellor is expecting this tax hike to recover £8.1 billion of the overall savings planned for this tax year. Capital Gains Tax is also increasing to 28% for high earners.
Mr Hesketh concludes: “The Chancellor made much in his speech of making sure that Britain was seen as being ‘open for business’ and supporting those that are working hard to grow or set-up new businesses within the UK, both of which will contribute towards getting the UK’s economy back on track. The flexible workforce will play a critical part in the recovery of the UK economy and on face value, the new coalition Government appears to be making the right noises in terms of wanting to genuinely understand the self-employed professional market, which I believe the industry should see as optimistic.”