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Thames Valley: Business rates likely to be at forefront in Budget address

3 March 2017
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Finance

Looking ahead to the Spring Budget next week, David Ashworth, head of tax at KPMG in the Thames Valley, said: “Many are expecting a somewhat ‘boring Budget’ next week with no major structural changes and no relaxing of the Government’s current fiscal stance. We are however expecting the chancellor to address business rate reforms, the ‘gig economy’ and the pressures on social care and funding."

Ashworth added: “Businesses in the Thames Valley are likely to be keeping an eye out for measures around tax reliefs, notably for research and development, particularly once the UK is out of the EU. Business owners across the region may also be hoping that Mr Hammond takes advantage of the rare opportunity he has to deliver tax cuts and make simplifications to support small and medium-sized businesses.

“Business rates is a key talking point for many SME businesses in the Thames Valley at the moment. With business rate revaluations coming into effect in April, while most SME firms will enjoy a slight reduction, some could be hit with a sizeable increase overnight. The Government has pledged help in the form of a £3.6 billion fund, but, if this isn’t enough, will the chancellor set aside more cash?

“Another key issue for businesses in the region will be ‘Making Tax Digital’ (MTD), one of the most fundamental changes to the UK’s tax system in a generation. There has been increasing concern about how much MTD will cost smaller businesses with significant disparity between Government estimates and industry figures. The Government has evaluated the transitional cost per business to be £280 (with subsequent savings of £100m per year across all businesses), however most think this is grossly understated. In contrast the Federation of Small Businesses (FSB) puts the on-going cost to business at £2,770 per annum – a significant cost given those initially affected will be SME’s, sole traders and small partnerships.

“From a wider tax perspective, priority needs to be given to supporting aspects of the tax system which bolster our international competitiveness. With the triggering of Article 50 imminent, the chancellor will need to demonstrate more than ever that the UK is ‘open for business’ and will remain competitive on the global stage.

“While the headline tax rate remains a factor in this regard, there are other areas that will be just as important in continuing to attract foreign investment. Targeted incentives and a good treaty network alongside things such as quality of infrastructure and access to markets and talent have played a vital role in ensuring the region, and the UK as a whole, remains an attractive place to invest.

“Overall, the UK economy has performed better than expected since the EU referendum, but as we head into exit negotiations the Chancellor will need to keep some ammunition back should things take a more negative turn.”


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