Friday, March 30, 2012

BLOG 125


BLACKSTONE FRANKS BUDGET BOOKLET


We do our budget booklet for clients and friends of the firm the day after budget day. This isn’t because I don’t want to stay up all night on budget day to get something out that day (although, to be honest, I don’t). It’s because I want a bit of time to let the changes sink in and think a bit about the implications. Our philosophy is that our clients will have read about the changes in the newspapers before they get our booklet so what they will want to know is the potential problems that could arise, and how the proposals are likely to affect them. As well as the explanation of the proposals, we want to give them some commentary on the changes.

We are only a small team, so it is a tough job. We sent the text to the printers 8 0’clock Thursday night, having spent most of Wednesday afternoon and all of Thursday writing. Indeed, I started writing the previous weekend. I could do this because George Osborne had published a draft Finance Bill last December, so we already had much of the proposed legislation. I thought we had better briefly cover this so clients know everything that is going to happen from 5 April next.

George Osborne has developed an odd system for the budget and Finance Bill. Instead of announcing the changes for the coming year in March and enacting them, he seems to announce them a year in advance, so many of the changes announced this year actually relate to the year 2013/14 (the year to 5 April 2014). For technical changes this is good because it means that there is lots of time to think through the implications before the legislation is enacted.

Indeed there is an awful lot of consultation – too much to my mind! The Chancellor will announce something in the budget, consult on it during Summer or Autumn, and issue draft legislation just before Christmas so that experts can pick up areas where the draftsman may have missed a need for a relief or accidentally catch transactions that were not intended to be within the scope of the legislation. However it does make it difficult to remember what is going to happen when. It means that what is happening in April is a mixture of things for which we know the shape of the legislation and things for which we know very little until the Finance Bill is issued. Thankfully this is promised for this week – although last time I looked the Stationery Office website said “Out of Stock”!

It also means that there are some nasties that we were told about last year and have forgotten about. For example two of my interests outside tax are whisky and beer. I was relieved when the Chancellor said in his speech that he did not intend to impose further taxes on alcohol, but dismayed when I read the small print to find that the tax on beer was going up 3p a pint and that on whisky 41p a bottle – changes that he had announced in advance last year.

I didn’t think a lot of the budget. It’s funny how tax simplification always seems to mean scrapping reliefs and imposing more tax. It never seems to result in a tax reduction. I was staggered by the reaction to the decision that increased personal allowances for all means there is no need for a complex extra relief for those pensioners whose savings income is a bit above the State pension limit. That seemed a very sensible decision to me.

I was also surprised by the reduction in the 50% tax rate to 45% from 5 April 2013. I expected this to be Mr Osborne’s pre-general election giveaway in his 2014 or 2015 budget. It was bound to come in for a lot of criticism and although I, like most tax practitioners, feel that the 50p rate was ill-advised, those who were going to emigrate to avoid it have mostly already gone and a reduction to 45% is unlikely to lure them back. The extra 1% cut in corporation tax also surprised me as it is well-known that big business is hoarding cash in case the days get more rainy, rather than invest in jobs to rebuild the economy, so a corporation tax cut is likely to take more money out of the economy, the opposite of what the country needs.

I was personally depressed, albeit not surprised, at the fact that yet again there is no help for micro-businesses, apart from gimmicks such as the Seed Enterprise Investment Scheme and the cash basis for those tiny businesses that were not lured by Gordon Brown into incorporating a few years back.

So all in all, nothing to shout about, albeit that our budget booklet runs to 60 pages as compared with a norm of under 50. If anyone wants to know what we said about the budget and hasn’t received a copy, it can be found on our website, www.blackstonefranks.com.



ROBERT MAAS

1 Comments:

Blogger Jack Fernendes said...

This blog is very communicative related with local tax,defining budget and finance bill.Thanks for sharing.
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3:54 am  

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