Cities in the North West are to see the government commit to devolution of powers according to the Chancellor in his Autumn Statement; which is set to help regional business leaders with infrastructure developments, as part of the “Northern Powerhouse” initiative.
Karen Campbell, head of tax at Grant Thornton North West responds to other announcements from the Chancellor yesterday.
On innovation:
“The investment in sci-tech in the form of a new £235m Sir Henry Royce Institute in Manchester is worthy of the headlines.
“Other measures to support innovation are rather more modest. The increase in R&D tax reliefs is no great shakes in the light of the continued push to drive innovation – 5% more for small companies, whilst the above the line credit for large firms has gone from 10% to 11%.”
On business rates:
“It’s welcome to see an extension to the doubling of small business rate for another year. A full review of the outdated business rates system was overdue. We hope it results in meaningful change. The system needs to be made more responsive, both to changes in the economy and to the relative costs to different businesses. A root and branch review is a big decision which many politicians have shied away from, and could well help bricks and mortar retailers.”
On entrepreneurs:
“The nasty surprises include the removal of the ability to claim entrepreneurs’ relief when moving from sole trader or partnership to a limited company. With immediate effect the tax charge has gone from 10% to 28%. The change is part of George Osborne’s anti-avoidance measures, but few in the tax world would have regarded this as aggressive tax planning.”
On stamp duty:
“The changes to Stamp Duty are historic. It’s the oldest of all UK taxes, and moving to a more sensible system that works in much the same way as income tax means that many buyers will suddenly have some more cash in their pocket. In the short term it should boost consumer spending. We’d expect to see the saving quite quickly priced into housing valuations.”
On jobs and skills:
“On behalf of mid-sized businesses in the 50 to 500 employee ballpark, Grant Thornton has campaigned for the abolition of National Insurance contributionss for all apprentices. That relief has now moved from an age limit of 21 to 25, which is a move in the right direction.”
On exports:
“The Chancellor talks about the need for UK Plc to export more. Our own research in the Agents of Growth programme has shown that a third of mid-market businesses would be more likely to consider exporting to markets such as China or India if the exploratory costs qualified for an export tax credit. Whilst the £45million package of support for exporters is a step in the right direction it might be considered by some to be a drop in the ocean.”