VAT stimulus missing from budget say Thrings

Malcolm Emery, Partner at Thrings and a dual-qualified chartered tax adviser and solicitor, comments on what yesterday’s Budget announcement by George Osborne means for businesses and business owners.

“The Chancellor indicated this year’s Budget was one for building a resilient economy, and with the recovery gaining momentum but not yet secure, he had an opportunity to provide further stimulus by reducing the standard rate of VAT. It is therefore surprising he did not take this opportunity, particularly given this was a pre-election Budget.

“While the ongoing commitment to reduce the rate of corporation tax is to be welcomed, the number of individuals caught in the 40 per cent tax bracket has increased by 25 per cent since 2010. This puts more pressure on individuals who operate as sole traders or via partnerships, and many people will argue Mr Osborne could have done more to minimise the tax burden on small and medium-sized businesses.

“Meanwhile, the pension reforms and the introduction of a single new ISA with its annual tax-free savings limit of £15,000 are a welcome surprise, and stand to offer business owners the opportunity to plan for the future in a tax efficient way.”