Budget 2017 – Coughing and spluttering not allowed!
The Chancellor appeared in fine form as he delivered his second Budget speech. Prepared to crack a joke at the expense not just of the Opposition, but also his own Prime Minister, he said that he had his cough sweets at the ready. And well he might need them; the latest figures from the OBR might say that the economy is starting to cough and splutter, writes Robert Leggett – Business & Corporate Tax partner, Ensors Chartered Accountants.
The real focus of the Budget appears to have been on housing, building an economy for a high tech future, and the environment.
In terms of housing, the exemption from Stamp Duty Land Tax for most first time buyers will be welcome, but property developers will need to wait and see the outcome of a review into the gap between the number of planning permissions and housing completions. It is unclear what measures may be introduced in the future, but clearly there could be some sort of penalties for gaining planning permission and not proceeding to build.
On the future, there will be further investment in skills for the digital economy, as well as a review of employment status in our changing times. With this emphasis on tech in mind, a welcome change will be that R&D reliefs under the large company “RDEC” scheme will be increased from 11 per cent to 12 per cent.
Furthermore, the maximum limits for EIS/VCT investments in “knowledge intensive” companies will be doubled to £2m per individual, and £10m per company. However, a new “risk to capital condition” will aim to restrict EIS & VCT investments to higher risk businesses.
Other measures relevant to business include:-
- Abolition of indexation allowance for corporate chargeable gains;
- More measures to assist with business rates, especially with the recent “staircase tax” ruling;
- Freezing of the VAT threshold for two years.
On the environment, the immediate impact for business will be in terms of diesel cars. Less than two years ago, the “diesel supplement” on company car benefits in kind was due to be scrapped, but in the wake of the emissions scandal, we now find it will increase from 3 per cent to 4 per cent.
VED rates will also increase for new diesel vehicles unable to meet certain stringent new tests. The Chancellor clearly sees the future as electric, and will invest heavily in charging infrastructure, and also extend the 100 per cent first year capital allowances on zero emission good vehicles until 2021.
Let us just hope that we don’t run out of batteries!