TaxCorporate TaxFirms react to Lib-Con tax plans

Firms react to Lib-Con tax plans

Calls made to Lib-Cons for protecting small businesses, non-dom clarity and certainty in the overall tax framework

Firms have flagged up the dangers for small companies, alongside concerns
about entrepreneurs’ CGT relief and the complexity of non-dom legislation after
the Lib-Cons unveiled their official manifesto.

The Conservatives have trumpeted cuts to corporation tax, national insurance
reliefs for employers and have promised to look at rules for non-doms.

While many large companies will welcome the corporation tax cut to be
announced in the Budget, small companies will lose out from likely changes to
capital allowances according to PKF.

Marios Gregori, tax partner at the firm, said: “For companies with annual
profits above £1.5m the expected cut in the headline rate of corporation tax to
25% is clearly good news. But less profitable companies will make smaller
savings and those with annual profits of less than £300,000 will probably lose
out.”

The corporation tax rate for small companies is set to reduce from 21% to
20%. So any company currently claiming capital allowances on investments in
plant and machinery is likely to lose overall, if they are withdrawn.”

During the election, Lord Ashcroft revealed his non-domiciled status,
reigniting issues of how the government permits some individuals not to pay tax
on profits they make overseas.

Tax experts have called for a review of the “unworkable” current rules to be
carried out with stakeholders involved at every stage.

David Kilshaw, tax partner at KPMG, said: “Non-doms will hope that any
further review of the tax rules will be on the basis of proper consultation and
a sensible time frame for any proposed new legislation.

“There may be a grain of hope that this may be a positive development and
that the frankly unworkable current rules might be amended, especially the
definition of remittances by family members and the treatment of non-sterling
bank accounts.

“What we need more than anything is stability not another raft of small
print.”

The Lib-Cons have had to push through their combined plan, which involved
making rapid compromises. The profession called for certainty and detail to be
provided now that the blueprint had been finalised.

Mary Monfries, head of private business at PwC, said: “And though we still
wait to hear what the chancellor will say in his first Budget speech in June, it
is hoped that ‘certainty in the tax system’ will play a part, and would ask that
any changes to capital gains tax do not adversely affect entrepreneurs and
employee shareholders in growing businesses at this crucial time.”

Further reading:

Osborne
warned over hasty tax decisions

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