ACCA reacts to ‘political budget from political Chancellor’
According to ACCA, this was a political Budget focused on a range of populist measures, as was to be expected this close to the General Election. Chas Roy-Chowdhury, head of taxation at ACCA commented:
'As you’d expect so close to the General Election, this was a political Budget from a political Chancellor. It contained a number of welcome measures that will go down well with voters from a range of economic backgrounds such as a further increase in the personal tax free allowance to £11,000, a new fully-flexible ISA and the new first-time buyer bonus.'
On the news that the government will launch a review into SME business rates Chas Roy-Chowdhury said: 'Business rates can be a punitive cost for small businesses looking to grow, especially those operating in the retail sector, so the Chancellor’s commitment to a review is to be welcomed.'
On the announcement from the Chancellor of a reduction in lifetime allowance from £1.25m to £1m on pensions, Chas Roy-Chowdhury said: 'This is not the right way to deal with long-term investment. Every year the government steps in and moves the goalposts. The Chancellor should exercise caution when meddling with the pension pots of those who have been contributing to them for 30 to 40 years in many cases. They are heavily relied upon by those looking to retire and care should be taken not to jeopardise their future.
'As expected Osborne continued with the policy of greater flexibility for pensions by allowing the sale of annuities. The big challenge for the Chancellor is to create a fair market for these sales. What the Chancellor didn’t make crystal clear was the tax implications of withdrawing a lump sum. There is the potential for a large number of people to get quite a shock when they find out they will have tax to pay on their money should they wish to get their hands on it.'
On the Chancellor’s plans for fighting tax avoidance, Chas Roy-Chowdhury said: 'Combating tax avoidance has been a key plank of this Government’s rhetoric for the last five years, so today’s announcement came as no surprise. We are disappointed that the Chancellor has chosen not to wait for the OECD’s important work with the G20 to be completed before pressing ahead with his plans. Any measures must be backed up with additional resources for HMRC otherwise they will be nothing more than headline grabbing soundbites.'
On the news that the government will phase out conventional tax filing by as many people as possible, Chas Roy-Chowdhury, head of taxation at ACCA said: 'This move to the brave new world of digital tax returns will allow people to have a holistic view across the range of taxes they pay. As well as settling their taxes, taxpayers will be able to amend their tax codes and even pay their parking fines online, which is welcome news.
'Many of those filing paper self-assessment forms are self-employed people and those running small businesses who have been using the postal method for many years. They need to be given access to resources which help them move the process online to ensure they aren’t left behind.'
It was however disappointing to note that the starting point for paying National Insurance Contributions was not increased alongside personal tax free allowance Chas Roy-Chowdhury said: 'ACCA has called for this since the Chancellor began raising the income tax threshold in 2010. The NIC’s bands need to be raised in line with personal tax free allowance to ensure the amount of tax people pay remains consistent and fair for all.'