The chancellor's 'safe and inoffensive' Budget delivered little to excite the business world and little to capture the financial professional's vote, though some accountants warned of hidden dangers lurking in future consultations.
Clearly designed to please the public ahead of the election, Brown froze taxes on booze, widened the 10% tax band and helped families, churches and filmmakers.
As far as business was concerned, the Budget press releases revealed further tinkering to dampen the effect of his controversial changes to double tax relief announced last year.
He also revealed an ‘intriguing’ proposal to bring tax profit calculations for small companies closer to those in their accounts, which could remove at a stroke bread-and-butter work for small practitioners.
‘This Budget appears to be a safe, inoffensive rerun of the pre-Budget Report,’ said Francesca Lagerberg of the ICAEW’s Tax Faculty.
In what will almost certainly be his last Budget before a general election, Brown said the government was providing the environment for sustained investment and greater rewards for entrepreneurs.
But overall, Brown declared this was a Budget for children and future generations.
He raised the working families tax credit by Pounds 5 per week and the children’s tax credit will now start at Pounds 10 per week rather than Pounds 8. He also increased the nil rate band of inheritance tax to Pounds 242,000 from Pounds 234,000.
The opposition led by William Hague, said the chancellor had given a cynical Budget which exploited the stealth taxes introduced by Labour since 1997 in an effort to win votes.
‘Every pronouncement he has made is set against the massive increase in taxes he has already introduced,’ he said.
Budget for business?
Looking to business’ interests, Brown announced VAT payments for small companies would be simplified with the threshold for small companies raised to Pounds 54,000. He said the consultation on plans for tax relief on intellectual property and goodwill would continue following the publication of draft legislation.
But on the whole there were few surprises for business – leading experts to label it a re-run of November’s pre-Budget report.
Red tape disquiet
The Association of Chartered Certified Accountants said it was a missed opportunity to lift the red tape burden which is stifling small business.
ACCA head of tax Chas Roy-Chowdhury, said: ‘He could have announced a radical package of measures to release small firms from multiple administrative and regulatory obligations. Instead he has added eight weeks to statutory maternity leave and two weeks to paternity leave.’
Alastair Kendrick, tax director at Ernst & Young, said it was a wide-ranging Budget designed to appeal to as many people as possible. But he questioned whether he had done enough to convince the public to vote Labour with his family friendly and income tax measures.
‘The extension of the 10p tax band will only give something like 75p a week in savings to the average taxpayer and other measures are more aimed at the public sector, childcare and the long-term unemployed.’
Duty on ultra-low fuel cut by 2p a litre, cut will also apply to all unleaded petrol until June. 3p a litre cut in duty on ultra-low sulphur petrol diesel. Road fuel gas tax cut by 6 per per kg.
Reduced rate for vehicle excise duty to be extended to existing cars up to 1500cc. Vehicle excise duty abolished for tractors.
Increased up to Pounds 75 per week by 2002.