The Budget has made strides towards establishing a business environment that will stimulate growth and investment, according to a leading travel industry firm of accountants.
Chartered tax advisor Mark Caldicott, who heads up industry accountant White Hart Associates’ tax department, said the chancellor had done as much as could be expected to encourage enterprise.
“He has only got a very limited scope to focus on growth given the budget deficit but he has come up with some quite clever ways to do that and done quite a god job,” he said.
Caldicott welcomed the higher than expected reduction in corporation tax and the increased additional relief for investors in start up companies under the Enterprise Allowance Scheme.
From April 6 this has increased the income tax threshold for investment from 20% to 30% which Caldicott said would make it more attractive and less risky for investors to back enterprises.
The setting up of 21 new enterprises zones and increased research and development tax credit for firms developing leading edge technologies could also help firms in the travel industry.
Osborne said one of the key aims of the Budget was to reduce complexity in the UK’s tax system and that 43 existing reliefs would be abolished.
Caldicott said how this impacts travel was not clear from the announcement this afternoon. “The devil is in the detail,” he said.
The move to change the way tax allowances are calculated moving from a RPI to CPI basis, would be a hidden tax increase that would mainly impact on the lower paid, Caldicott added.
Another significant move, to merge the income tax and national insurance systems, would be welcomed by businesses, Caldicott said, but he added this was a long-term measure.
“This is an extremely complicated area and will take years of consultation. For instance there is no national insurance in dividend payments, so is this new tax rate going to apply to dividends,” he said.
Osborne told the House of Commons that a Start-UP Britain campaign would be launched to help establish and grow businesses.
Small businesses will have a business rate holiday extended for a further 12 months to October 2012, at a cost of £370 million to the Exchequer, Osborne announced.
“Small businesses are the innocent victims of the credit crunch,” Osborne said, announcing he had agreed a 15% increase in the availability of capital from the banks.
New small businesses employing less than 15 people will also continue to enjoy exemption from regulation.