The first thing that struck me about today’s budget was what little reference there was to the whole Brexit debate. This was the elephant in the room and, whilst there was one or two references by the Chancellor, what it didn’t say was the whole numbers that we heard were based on implementation of the Chequers plan. Now there’s a huge amount of uncertainty over that as we all know, and therefore, I can’t help but think that we’re going to be back in the new year with a Budget part two.
There wasn’t a huge amount in the budget in relation to businesses but particularly for those middle market businesses I’ve picked out three areas that I think are of relevance. The first is the fact that the corporation tax rate reduction to 17 per cent has been confirmed – so that’s good news. Secondly, the increase in the annual investment allowance from £200,000 to a million for the next two years should allow middle market businesses to incur capital expenditure and get full tax relief. And the final point is the digital services tax which the Chancellor mentioned is likely to come in 2020 is only meant to apply to the tech giants. So, therefore, the start-up and middle market technology businesses really have nothing to fear from the DST.
On the personal side the fact that the thresholds for the personal allowance and the higher rate band have come in a year early is really good news. The point I would just mention for those in the £100,000 - £125,000 income bracket where there is a 60 per cent tax charge, the fact that the pension rules were not changed in this budget still means that you can still use your pension allowances to shelter your income of those higher rates.
On the capital gains tax side there was a lot of discussion pre-budget about the changes, or potential changes to entrepreneur’s relief - that didn’t really materialise - the lifetime allowance of 10 million and the rate of 10 per cent still applies. What has changed however is that the ownership period has been extended from one to two years. I don’t see this as a major point because it is there to still apply to genuine entrepreneurs and I suppose in the scheme of things a one year extension to the conditions test is a small price to pay to maintain the full benefit of entrepreneurs relief – so that’s good news.
So, in summary, it’s been a fairly steady-as-you-weigh budget, with some nice changes for businesses and individuals. However, the big issue of Brexit is still there - its unresolved - and as I said at the start I can’t help but think that we’re going to be back in a few months’ time with a complete re-run of the budget.