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What to expect from the 2013 Budget

Accountancy firm RSM Tenon has come up with a number of issues which will feature in this year's budget on Wednesday.

The firm has admitted that business tax has been 'reformed considerably' over the last couple of years and the focus on innovation 'is welcome'.  The Patent Box is due to commence from April 2013 and coupled with the relaxation of some of the rules around R&D tax credit relief, RSM has said it is vital to make sure businesses are aware of what they can claim. 

In addition the firm would like to see a confirmation that the standard and small company rates of corporation tax will finally converge and be set at 20 per cent,  an indefinite extension to the temporary increase to the Annual Investment Allowance at £250,000 to encourage more investment. Additionally, further upfront measures to encourage investment in owner managed business to bridge the bank funding gap.  The current Enterprise investment Scheme is said to be 'too complex and restrictive.'

Finally, RSM is hoping for more certainty in the tax system.

On a personal level, the firm has said Individuals have been on the receiving end of 'many complex changes' in the tax code over the last couple of years and there is 'no doubt' the overall tax burden has increased.  It has said it would like to see some encouragement for investors and those trying to protect the wealth they have created through hard work.  
The accountants are hoping for 'an intelligent debate' on a wealth tax - the proposed tax on Mansion has been labelled as lacking all the ingredients of proportionality.  They would like to see a 'proper assessment of the value of an individual’s wealth', rather than 'target one asset class that frequently can represent a distorted position' particularly if there are 'significant borrowings' in place.

More radically, RSM is hoping for a u-turn on the proposed further restrictions to tax relief on pension contributions from April 2014, an increase in the personal relief to £10,000 in 2014, more encouragement for savers and equalisation on the application of the Child Benefit Higher Charge to address the anomaly whereby husband and wife each earning £49,999 do not suffer the restriction but a couple earning £50,001 and £49,999 respectively are caught. Finally, the closure of outdated reliefs and anomalies in the income tax legislation even possibly on the 5 per cent withdrawal on Investment bonds would be welcome changes.

Meanwhile, George Bull of rival firm Baker Tilly argued in his pre-budget briefing last week that the main theme of the budget would be a clash of austerity versus spending and how the government hopes to reconcile the two. He also added that while the abuse of corporation tax by international giants would be likely to feature, any real change would be left to the next administration to enforce.

Remember to check regularly on Wednesday 20 March as we bring you live updates on the 2013 Budget.

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