Autumn Statement: Reduce corporation tax for smaller businesses
The chancellor has already hinted at further reductions in corporation tax. This is on track to fall to 22 per cent for larger companies by 2014 and there is talk of moves to bring this down to as low as 20 per cent, which I think would be a good start.
However, the existing 20 per cent rate of corporation tax for smaller businesses has remained the same and I would like to see a potential reduction in this rate for smaller businesses, which would be of significant benefit to a lot of our clients.
The chancellor has already done his bit for entrepreneurs with enhancements to the Enterprise Investment Scheme and the new Seed Enterprise Investment Scheme, but these are still overly complex and I would also like to see moves to simplify them to encourage greater take-up.
Any proposals to reduce rates of income tax are always welcome, but this is very unlikely. I’m not expecting any income tax increases though as I think the chancellor can’t go any further on that for now.
The annual speculation for the reduction of the amount of pension contributions a person can expect to get tax relief on means that anyone wanting to contribute up to the maximum of £50,000 should do so before December 5. The speculation is that the limit may be reduced to £30,000 or £40,000 and would bring significant additional tax revenues for the chancellor. On the down side it would further undermine the political desire to encourage more people to save for retirement.
Overall, it’s likely the chancellor will tell us that the government has borrowed more than he expected to, so I expect him to say that he will be sticking to his deficit reduction plan, and that’s likely to mean further spending cuts.
Tony Medcalf, tax partner at Chiks