PCG - Backing business
Freelancer group, the PCG, saw it as a Budget which backs business - with a nod to the self-employed.
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"They are a vital component in any truly resilient business landscape. It is therefore very encouraging to see the Government start to consider those in business on their own account. For example, the extension of the childcare scheme to the self-employed is a positive step forward, particularly for female freelancers.
“There is also some investment in infrastructure and a fuel duty freeze, which is great for freelancers who travel across the country from client to client. Raising the personal allowance to £10,500 will also be universally welcomed across the labour market, including those in business on their own account.
“However PCG is concerned by the Government’s plans to push ahead with the onshore intermediaries legislation which targets tax evasion. The Chancellor is right to clamp down on tax evasion but the Government, in its commitment to tackle this problem, must be very careful not to target legitimate independent professionals who are driving growth in the economy.”
APSCo - Travel and subsistence
Agency group, APSCo, noted that the Chancellor had signalled his intent to look again at the old chestnut of travel and subsistence, and how that could impact on the umbrella industry.
Samantha Hurley, Head of External Affairs at APSCo said: “In the Budget George Osborne made some key announcements relating to employment, benefits packages, and apprenticeships. The Budget is one which will benefit savers, manufacturers and those who are looking at apprenticeships. It could also be seen as a Budget which encourages people to raid their piggy banks. All of this will affect how appealing employment packages are in many different ways and so may impact on APSCo members.
“The Chancellor announced that the Government also intends ‘to review the rules underlying the tax treatment of travel and subsistence expenses, and will call for evidence on remuneration practices to inform any future reforms’. APSCo is not unduly surprised that travel and subsistence expenses are on the Government’s agenda for review, and we will obviously keep a close eye on this on behalf of our members as it may impact on the umbrella industry, which utilises such schemes.
“The legislation on both onshore and offshore intermediaries wasn’t mentioned specifically in the Chancellor’s speech; however it is included in the online paperwork. APSCo will be discussing this issue, and HMRC’s recent response at its members meeting.”
CIOT - Simplicity for business
The Chartered Institute of Taxation (CIOT) gavean enthusiastic welcome to the Chancellor’s announcement that the Government will be implementing recommendations from the Office of Tax Simplification (OTS) that would significantly cut administrative burdens for employers. In particular these include proposals to make it much easier for them to process employee benefits and expenses.
Colin Ben-Nathan, Chairman of the CIOT’s Employment Taxes Sub-Committee, said: “It is good to see the Government listening to the OTS and taking action on simplifying the tax system for business.
“Employers are subject to a cumbersome system for the reporting of employee benefits and expenses and its streamlining should be a high priority. In particular, introducing a Reimbursed Expenses Exemption to replace the dispensation process is well worth considering as it could cut through the whole process of having to report non-taxable expenses.
“Putting in place a system of voluntary payrolling of benefits is long overdue. It will cut down on end of year administration. Many payroll departments will be able to process the benefit through the payroll as part of their normal process through the year.”
The Chancellor also announced that he would be adopting the OTS proposals for the collection of Class 2 NICs to be moved into the Self Assessment system and collected in the same way as income tax and Class 4 NICs.
Colin Ben-Nathan said: “This is a welcome and overdue simplification. It builds on OTS proposals from 2011 and 2012 and will be helpful in reducing administrative burdens for the self-employed, especially if Small Earnings Exemption claims, deferrals and under/over payments of NICs are all included in the self-assessment process.
“However, those on lower incomes may need greater assistance from HMRC if they are to avoid getting behind with paying their taxes. Education will be needed around budgeting for taxes that are payable potentially 22 months after some of the income was earned (possibly longer depending on accounting year end). HMRC should consider providing a “pay monthly on account” option for those affected to cover Class 2, Class 4 and income tax.
“This could be a first step towards combining Classes 2 and 4 NICs.”
IMA - opportunities for interims managers
Simon Drake, chairman of the Interim Management Association (IMA) said: “The Chancellor’s 2014 Budget showed some positive signs in relation to support for UK business. I was particularly interested to hear about new global opportunities through export finance. The UK is the hub for interim management in Europe, and every poll conducted by the IMA highlights the growing trend of UK interims working overseas
“The UK has the most established interim market and is the most respected and renowned – globally. And, today, Interim managers are increasingly working abroad, where their talents are in demand.
“Interims have a strong understanding of governance and many also command good language skills, which supports their bid to work in other markets. They create heritage within a business, because they follow and embed well-run processes.”
FPB - invest and grow
The Forum of Private Business (FPB) saw the headlines as focusing on energy policies and export.
Phil Orford, Chief Executive of the Forum of Private Business, said: “This was a Budget that offers some help to all levels of business, with perhaps a slight focus on the mid size energy intensive and manufacturing businesses, rather than the very small ones. However, it does help to tackle the cost of energy and makes good on the commitment trailed before the Budget to support those that look to invest, either in the UK – with a more extensive Annual Investment Allowance – or abroad, with a £3bn export support budget.
“Overall, the Budget, combined with the more cost measures to help small businesses announced in the Autumn Statement, sent out a positive message to invest and grow in the year ahead.”
On R&D Tax Credits, the Government announced that from April 2014 it will increase the rate of the payable credit to loss makers from 11 per cent to 14.5 per cent. A loss making SME investing £100,000 in qualifying R&D will be able to claim a cash payment of £32,600; £7,800 more than under the existing scheme.
Mr Orford said: “This is obviously a more generous scheme rate than previous. We are interested to see how a Government can take the successful R&D scheme and apply it to export, which is where future growth needs to come from.”
The Government announced it will support businesses across the UK to invest and expand by doubling the Annual Investment Allowance to £500,000 until the end of 2015.
Mr Orford said: "We are a long way from the early years of the Chancellor’s reign, when the Annual Investment Allowance was reduced to £25,000. We are overwhelmingly supportive of the doubling of the current rate to £500,000, as well as its extension, which will help any small business looking to invest. Over half of Forum of Private Business members have targeted 2014 for growth and this allowance will help support them to invest for that.”
The Government announced it will make permanent the SEED Enterprise Investment Scheme.
Mr Orford said: “The Seed EIS scheme has helped well over a thousand early stage businesses to date and we welcome the scheme being put on a permanent basis. It is important that further sources of finance are clearly signposted as businesses outgrow the finance available through this scheme.”
ARC - VAT disappointment
The Association of Recruitment Consultancies (ARC) welcomes the announcements made by the Chancellor in the Budget so far as they relate to supporting businesses. However it expressed its disappointment that Mr. Osborne has not made any change in respect of VAT charges for the supply of agency workers to non VAT registered organisations, including government departments, local authorities and charities.
Adrian Marlowe, chairman of ARC, said: “Agency workers are a specific resource that should be readily available to all these organisations, but the inability to recover VAT deters their use as VAT is currently chargeable on the pay provided to the worker."
This is particularly so, ARC maintains, in the case of the NHS in respect of which HMRC has in February embargoed the recovery of VAT where agency workers are used.
Mr Marlowe said: “All these organisations need every penny they have to provide the services they are required to deliver on increasingly tight budgets. Whilst the Treasury recovers the VAT, and as such this helps towards the deficit, public services are affected not just by imposed budget restrictions but also by this tax.”
“We have long campaigned for reinstatement of the VAT staff hire concession which was dropped by the Government in 2009. Partial exemptions were reintroduced for limited medical services a few years ago but we believe its reintroduction across the board for those types of organisations that cannot recover the tax but provide front line services would not only make available more resources but also lead to improvement in services and greater employment.”
More information
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Susie Hughes © Shout99 2014
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