Budget Cycle

BDO’s team of specialist tax professionals analyses the content of each Budget, Autumn Statement and Draft Finance Bill to bring you insightful summaries and commentary on their possible impact on individuals and businesses.

These summaries can all be accessed from this page but if you have any questions or concerns about how these measures could impact you or your business, please do not hesitate to contact your usual BDO adviser or  Jonathan Hickman

HOW DOES THE BUDGET AFFECT YOUR SECTOR?

Typically, a government seeks to raise taxes in the early years of a parliament. Undoubtedly, the Financial sector and banks in particular will have been hoping that this is one tradition that would not be maintained in today’s Budget. 

Since the most recent increase in the bank levy, effective since 1 April 2015 – the ninth such increase since 2011 – there has been active lobbying against further hikes. In addition, certain banks – those heavily impacted by the levy - have been indicating that the tax is a material consideration in potential plans to restructure, particularly where significant overseas operations are held through the UK.

The second budget of the year promised to be a more ideological affair with the Conservative Government now holding a majority as a result of the May election.

There has been recent evidence that the UK economy is swinging toward an overreliance on the service sector once more, which is disappointing given the recent political attention on rebalancing the economy towards manufacturing. There were hopes before the Budget for more support for the manufacturing sector, particularly those innovative and high-end manufacturers driving the UK’s economic recovery.

In this Budget, the Government reiterated its commitment to making the most of the UK’s oil and gas resources including the safe extraction of shale gas.  Although further reductions in the tax rates would have been welcomed, the industry will see continued stability in the current regime with no substantial changes announced.

Billed as a Budget for working people, is George Osborne’s Budget seventh time lucky for the professional services industry?

Today George Osborne delivered his seventh Budget and the first Tory only Budget in nineteen years. As predicted by many commentators, the Government has made significant changes to the welfare system, plans to tackle tax avoidance and the much criticised public sector spending cuts.

The Budget delivered by the Chancellor on 8 July was trailed as putting economic security first. Housing was on the Chancellor’s list but rather than any key announcement specifically aimed at boosting the house building industry he was more focused upon individuals and housing. The main areas are summarised below.

George Osborne’s second Budget of the year was heralded as a ‘One nation Budget putting security first’, underpinned by ‘higher wages, lower tax and lower welfare economy’. Many of the headline grabbing measures including the introduction of a ‘national living wage’ (NLW), rising income tax thresholds and reducing headline corporate tax rates will be welcome news for mid-market retailers.

Many companies in the natural resources sector have minimal UK activity and therefore the summer Budget may not have been an obvious concern. However with the lock on income tax, NIC and VAT rates, stakeholders may have been concerned that capital gains tax would be an easy revenue raiser; potentially increasing the rates to 20% and 40% in line with the current income tax bands (from 18% and 28%) and imposing additional conditions on employees' and directors' eligibility for entrepreneurs’ relief. Fortunately such speculation was ill-founded.

The hotel sector has performed well so far in 2015. In recent years, this success has been limited to the London market so it is pleasing to see this spread out to the rest of the UK. The sector was hoping that the Chancellor would provide some stability to the general economy and minimise any fallout from the problems in Greece.

The first Conservative Budget since 1996 lived up to expectations, with the expected squeeze on tax credits, but did contain genuine surprises. Many of the headline grabbing measures including the introduction of a ‘national living wage’ (NLW), rising income tax thresholds and reducing headline corporate tax rates will have a significant impact on businesses in the sector.

With the Chancellor keen to reassure the public that the Government is tackling high energy bills after the competition watchdog concluded that millions are paying excessively for their energy, the first Conservative Budget since 1996 was disappointing for the renewables sector, which had hoped to see reassurance for nervous energy investors.

CONTACT

CONTACTS

Jonathan Hickman

Partner
Tel. 0207 893 2496