Belfast Telegraph

Taxing time for Budget: Experts hope financial statement will deliver an optimistic outlook

By David Elliott

The week's Budget should reduce the burden of red tape for businesses, simplify the tax system and reduce the barriers which inhibit companies from taking on new staff.

That's the view of PwC Northern Ireland economist, Esmond Birney, who said Wednesday's pronouncement by Chancellor George Osborne – the last before May's election – should otherwise be relatively "neutral", although with a view toward growing the economy.

"Our hope is that the chancellor will minimise piecemeal changes and instead carve out a plan for supply-side reform," Mr Birney said.

"A clear strategy on supply-side reform would do much to build business confidence, which in turn could kick-start growth."

He said all eyes will be on whether Mr Osborne's words reflect the government's efforts to promote the UK as a place which is open for business with overseas investors and trading partners.

That will be particularly pertinent to those poised to invest here.

"The momentum is building – we know of a number of companies soon to give the green light on investment here," he said. "But the budget matters, and businesses will be looking for consistent messages. Not all the Autumn Statement announcements chimed with the overall approach."

Meanwhile, the body representing accountants here is focusing on tax in Wednesday's budget.

The Association of Charted Certified Accountants (ACCA) wants the current tax system updated and "fit for the modern economy".

Chas Roy-Chowdhury, ACCA head of taxation, said the chancellor needs to realise that an increase in the personal tax allowance won't necessarily mean more available income for working families because more people are being caught in the 40% tax bracket.

"Raising the personal tax allowance looks good on paper, but many families across the UK won't necessarily notice a difference in their take home," he said. "The higher tax rate is catching more and more people, which means they are paying more tax. HMRC figures show 7.7% of taxpayers in Northern Ireland pay the higher tax rate.

"Any rise in the tax allowance should be matched by raising the threshold of the 40% tax band, or freezing it at the very least."

He also wants the current tax-free threshold for inheritance tax to be increased given the fact the property market is picking up.

"Elements of the tax regime hark back to an era we have left behind a long time ago when only a small number of people earned enough to break into the 40% income tax bracket.

"It's surely time to bring our tax system into the 21st century."


What is the Budget?

The Budget, or Financial Statement, is a statement made to the House of Commons by the Chancellor of the Exchequer on the nation's finances and the government's proposals for changes to taxation. The budget also includes forecasts for the economy by the Office for Budget Responsibility (OBR).

What happens in Parliament?

The Chancellor of the Exchequer delivers his budget statement to Members of Parliament in the House of Commons. The first part of the statement typically begins with a review of the nation's finances and the economic situation. The statement then moves on to proposals for taxation.

Belfast Telegraph