A tax reforming budget
George Osborne will be feeling pretty pleased with himself, because the Chancellor鈥檚 plans to cut the headline rate of corporation tax and simplify the company taxation system bear a striking resemblance to proposals he announced on Monday.
Brown is cutting the headline rate of corporation tax by two percentage points to 28 per cent from April 2008. And he鈥檒l recoup the cost of that by recalibrating a series of depreciation allowances (or changing the rates at which companies can offset the costs of the deterioration of assets against their tax charges).
For small companies, there鈥檚 a similar mix of positives and negatives. The headline rate of small company tax is going up from 20 per cent to 22 per cent. The reason is that the Treasury wants to stem the tide of individuals classifying themselves as companies to take advantage of the low small-company tax rate.
However, the Treasury is endeavouring to ensure that genuine small companies aren鈥檛 disadvantaged, by massively increasing the depreciation allowance on investment up to 拢50,000 per annum (which will apply to all companies, big or small). On up to 拢50,000 of investment, there鈥檒l be an annual tax allowance of 100 per cent 鈥 which certainly looks very generous.
There will also be some big-company losers: the depreciation allowance for industrial buildings will be abolished; and there鈥檒l be a crackdown on the way some companies classify fixtures and fittings in buildings as 鈥渆quipment鈥 in order to benefit from generous depreciation allowances.
However, the depreciation rate for so-called long life assets is going up from 6 per cent to 10 per cent. But the depreciation rate on short life assets is being cut rom 25 per cent to 20 per cent.
There鈥檒l also be yet more tax incentives for research and development, with the tax credit for R&D going up from 150 per cent to 175 per cent.
All in all, I would expect big companies to welcome these measures. They will see it as a welcome attempt to restore the tax competitiveness of the UK, in the face of a worldwide downward trend for corporate taxes.
For small businesses, the reaction will be more mixed. Some won鈥檛 like the increase in their tax rate, but many small businesses may end up paying less tax thanks to the introduction of the more generous investment allowance.
The net cost of this corporate tax package looks broadly neutral to me 鈥 but I can鈥檛 yet be certain of that.
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So big business gets a handout at the expense of smaller companies. Well done, Gordenron.
Many small companies and sole traders are struggling at the moment with the influx of cheap labour. Paying more in tax will be the nail in the coffin for many of us. As for investment allowances, I can barely afford to keep my business ticking over.
Still at least I can get a job with a massive corporation, sell my soul and my independence and help them get even richer.
Roll on the next election. Then he's out.
Not just George Osborne's proposals. Lib Dems proposed corporation tax headline cut in their tax policies launched last year, paid for by removing some reliefs. Osborne more or less nicked this from the Libs.
Funnily enough the Lib Dems have been calling for a 2p cut in the basic rate of income tax too, although I think they wanted the 10p rate to go to zero rather than 20% (that's what Brown's using to pay for most of the cut in the headline rate).
Once again Gordon picks on the small fry.
By making the 10p rate 20p he more than recoups the supposed 2p cut in the basic rate. Then by claiming that the overcomplicated tax credits system will ensure that you are better off, he has pulled off the greatest daylight robbery ever seen.
Once again Mr Brown has proved he is a master of economics, not least at being economic with the truth.
It seems that much of the Chancellors budget speach is taken up with self congratulation about how well we are all doing under Labour. However I am yet to find anyone or any part of UK PLC that feels better off after a decade of Labour treading water and fiddling and fudging the numders for political gain rather than economic prosperity.
Jimmy must have forgot the pensions credit robbery 10 years ago, that was 24/7. This man Brown has everything happening next year or the year after. Thousands 0f pensioners will be dead by 2010 and will never benefit, those who survive will have any benefit eaten away by inflation. Why cannot this man give us our benefits now. I'm now over 69 and with council tax, water rates, gas and electricity I have less disposable income per pound than four years ago. Thanks a lot Brown and Blair, the sooner they go the better.