Lisa Potter's budget comments

Darlings’ delivery dull!!

As Partners we are asked to report on the budget but yet again it appears to be a year of nothing but contradiction and cost, especially to low level earners and small businesses, and the replacement of current policies with the same policies but with new titles for example “First Year Allowances” replaced by “Annual Investment Allowance” – counting the new titles for existing policies is possibly one of the most exciting things to have happened in the budget.

We are encouraged or one might say brainwashed in believing that going green is the way to go. Disappointingly the Government does nothing at each opportunity it has to enforce legislation that makes this a feasible reality. The Government has pledged to cut emission levels by 80% by the year 2050 yet they increase winter fuel payments in excess of 25% when our climate is the mildest it has ever been and therefore will encourage heating appliances to be turned up. Surely this investment would be better spent on replacing out of date heating systems that are not energy efficient. The cost of running ‘polluting vehicles’ increases yet there is no provision for improving or investing in the public transportation system which remains one of the most costly and inefficient in Europe and until this is addressed provides no real alternative to business users as a form of transportation.

There is no encouragement to businesses to recycle as it always comes at a cost. The bulk of recyclable waste is commercial and the Government need to assist businesses to dispose of this preferably with an incentive to do so as whilst it is a cost it won’t happen especially now that the rate of corporation tax for small businesses has increased. Workers spend the majority of their time in the business environment, educate them here and they will be encouraged to recycle more at home.

Most allowances have increased by inflation (nothing new there) except alas for corporation tax. Larger businesses will be benefit from a 2% decrease in the rate (10% reduction) whilst small businesses will suffer a 1% increase (5% increase). Go go darling… that’s what is called encouraging the entrepreneurial spirit! Yet as I read on there is a provision for entrepreneurs but shockingly in a society that thrives on political correctness and human rights it is aimed at encouraging Women Entrepreneurs through the creation of a £12.5m capital fund. As a woman in business that strives for equality in the work place, specific reference to this is just not acceptable. All entrepreneurs should be treated fairly and equally.

The best news appears to come from capital allowances as the following amendments are made:

• A new classification of ‘Features integral to a building’ will benefit from a rate of 10%, once the confusion and interpretation of what is included has been dealt with.
• An Annual Investment Allowance of £50,000 for most businesses which gives relief of 100% of the first £50,000 of expenditure, this replaces the current first year allowance of 50%. The danger here is that most businesses do not understand the difference between the tax and accounting treatment of writing down the value of assets, this will now be harder to explain especially in the second year where there is a high possibility that the tax proportion of profits will increase substantially.
• Research and development tax credits rise from 125% to 130% for large companies and from 150% to 175% for SME’s (although this is subject to approval from the European Commission).
• From April 2009 the capital allowance treatment of cars reformed to be based on CO2 emissions. Good for the environment or is it, in reality this will not discourage or reduce the use of vehicles as there is no alternative to reliable business travel unless serious investment is made in the public transportation system.

Overall a non eventful budget and Darling certainly hasn’t been daring.

If you wish to comment on what Lisa has said email her by clicking on her name.

Date:12 March 2008