A POLITICAL BUDGET as was to be expected from a notoriously political chancellor this close to the general election.
Making the headlines are the range of measures that came thick and fast towards the end of George Osborne’s speech, such as a further increase in the personal tax free allowance to £11,000, a new fully-flexible ISA and the new first-time buyer bonus.
There was mixed news for pensions however. The announcement from the chancellor of a reduction in lifetime allowance from £1.25m to £1m on pensions looks to me to be a risky way of dealing with long-term investment.
It seems like the government moves the goalposts every year despite repeated warnings from ACCA and others that meddling with the pension pots of those who have been contributing to them for 30 to 40 years could have a hugely destabilising effect.
On a slightly more positive note, Osborne continued with the policy of greater flexibility for pensions by allowing the sale of annuities. The big challenge for the chancellor is to create a fair market for these sales. What the chancellor didn’t make crystal clear was the tax implications of withdrawing a lump sum. There is the potential for a large number of people to get quite a shock when they find out they will have tax to pay on their money should they wish to get their hands on it.
So close to the election it is unsurprising to see a Budget weighted towards personal finance, but there were a few new developments for businesses
Combating tax avoidance has been a key plank of this government’s rhetoric for the last five years, and yesterday was no different. Personally I am disappointed that the chancellor has chosen not to wait for the OECD’s important work with the G20 to be completed before pressing ahead with his plans.
Irrespective of whether the timing is right or wrong, any measures must be backed up with additional resources for HMRC otherwise they will be nothing more than empty rhetoric.
Perhaps the biggest story to come out of the Budget was the news that the government will phase out conventional tax filing by as many people as possible. The positive side of this move to the brave new world of digital tax returns is that it will allow people to have a holistic view across the range of taxes they pay. As well as settling their taxes, taxpayers will be able to amend their tax codes and even pay their parking fines online, which is welcome news.
However many of those filing paper self-assessment forms are self-employed people and those running small businesses which have been using the postal method for many years. They need to be given access to resources which help them move the process online to ensure they aren’t left behind.
The rumblings from those in the know in the hours since the Budget seem to point towards a variety of issues in exactly how the chancellor’s plan will be rolled out in real terms. It’s important for our small business owners that a change of this importance doesn’t go the way of some of the other IT projects undertaken by this government in recent years.
Chas Roy-Chowdhury is head of taxation at ACCA
HMRC is continuing to ramp up the number of raids on premises it carries out as part of criminal investigations, searching 761 properties in the last year
The latest opinions from Accountancy Age on Making Tax Digital, and outline plans to evolve the UK's corporate governance regime
Five million taxpayers are ow using digital personal tax accounts (PTA) as part of the making tax digital strategy, HMRC said
Lord Howard Leigh of Hurley discusses the government’s initiatives to mitigate tax avoidance and evasion