Increasing the personal allowance to £10,500 from 2015/16 will cost the Treasury £7bn, according to the Budget policy decisions costing document released today.
The policy decisions costing details show that cutting back on public spending, plus clamping down on tax avoidance, are they key savings areas to pay for some of the business growth plans announced by chancellor George Osborne in this afternoon’s Budget.
Bringing forward tax payments that are in dispute will see a £4bn take for the Treasury, while revaluing public service pensions will save £3.5bn. A further £1bn of annual central Government savings will be brought in from 2016/17 onwards.
Doubling the Annual Investment Allowance, where capital allowances are accelerated through into the first year of expenditure, to £500,000. This decision will cost the Treasury £2bn in the first three years of its introduction, but will save £400m over the next two years due to the acceleration of claims in earlier years.
“AIA is a very good initiative, and will be particularly effective in incentivising small- and medium-sized enterprises to invest in capital expenditure,” said Kevin Hindley, a managing director at Alvarez & Marsal Taxand.
The government’s limiting of the disparity between the way the UK and EU taxes carbon burning by businesses to £18 will cost nearly £2bn. However, some suggest that the savings could be passed onto customers.
“The difficult balancing act that government is trying to achieve is to encourage investment in low carbon, sustainable and indigenous power generation while at the same time protecting energy users from the costs of doing so,” said Tony Ward, Head of Power & Utilities at EY. “Freezing the floor and offering support to energy users to mitigate rising costs clearly addresses the latter objective.”
Reducing the pensions withdrawal tax rate from 55% to the marginal income tax rate sees the Treasury predict that an increase in withdrawals will see the tax take increase by £3bn over the next five years.
CIot urges HMRC to consider a delay to the 1 September 2017 introduction of its new corporate offence of failure to prevent the criminal facilitation of tax evasion
Despite concerns over the viability of BHS, advisers including Grant Thornton were paid in the millions of pounds for their roles, according to the Work and Pensions and Business, Innovation and Skills Select Committees
HMRC intends to extend the date for withdrawal of transitional relief on investment growth from 30 November 2016 to 31 March 2017
The current business rates system is over-complex and reform is needed, but reforms should focus first of all on simplifying the appeals process, particularly for businesses which are subject to business rates exemption