• Swindon & Wiltshire Economy
• Thursday March 14 2024
• Author Name: Peter Davison

Monahans experts help Swindon business leaders make sense of the budget

Experts from accountancy firm Monahans led business leaders through the implications of the Chancellor’s uneventful Budget last week, during a meeting co-hosted by Swindon Chamber of Commerce.

But with the Chancellor failing to pull even one rabbit from the hat, there was, admitted tax director Stephanie Hurst (pictured left), “very little to get excited about.”

Tax levels were, she pointed out, at their highest levels since 1948, because of fiscal drag. But even then, there had been very little headroom for the Chancellor to offer tax cuts.

The VAT threshold had been nudged upwards, but not by much. “Of the 5.5 million SMEs in the UK, just 28,000 will be affected by the change,” she said.

There was some rule tightening around R&D tax breaks, meaning schemes were not as advantageous to SMEs as they had previously been.

On the near horizon, warned Stephanie, was the increase in the National Living Wage, due to rise to £11.44 in April. This, she said, would have a negative impact on the already-struggling retail and hospitality sectors.

The most significant announcement was a further reduction in National Insurance contributions – for the second government fiscal event in a row.

“NI has been cut by a further two pence,” said senior private client tax consultant Jessica Long (right), saving a person earning £25,000 £249 a year and a person earning £75,000 £754 a year.”

However, for most working adults any benefit would be “levelled out” by fiscal drag – the freezing until April 2028 of tax bands during a period of inflation, which meant more people were in the tax system, and more had found themselves paying the higher rate.

“The announcement I least expected was the change to non-dom status,” said Jessica.

It was obviously an announcement Labour had not been expecting either – they had earmarked the revenue raised by a clampdown for investment.

Instead, the Conservatives had bagged it to put towards the NI cut – tax remittance claimed by 37,000 non-domiciled individuals costs the treasure £3 billion a year while the NI cut will cost £10 billion annually.

There was a welcome for a new tax-free ISA which can be invested in alongside existing ISAs. The ‘British ISA’ will be focussed on investment in UK businesses.

And changes to Child Benefit rules were also welcomed. Switching the mechanism by which the benefit would be determined from individual earners to household income would “redress what has historically been viewed as an unfair policy,” said Jessica.