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Was it a simple, predictable, fair Budget that supports work?

Was it a simple, predictable, fair Budget that supports work?

It’s all over bar the shouting, and no doubt there’ll be a fair bit of that over the coming weeks. I’m talking about the Budget of course.

What will it mean for contractor accountants? Were there any hidden surprises? George Osborne claimed that this was a Budget that rewards work. He promised a simpler tax system and said the government was pushing ahead with plans to integrate income tax and National Insurance. More details of this integration will be published next month.

He also called tax evasion and tax avoidance morally repugnant and said legislation for a GAAR would be laid out in next year’s Finance Bill.

One of the biggest cheers came when he announced that personal income tax allowances would go up to £9,205 from April 2013. This measure will mean many low paid people will pay no income tax at all.

In the days running up to the Budget there had been rumours that the Chancellor would scrap the 50p income tax rate. It has been harming the British economy and he explained that HMRC had assessed the effect of the top rate and it had brought in a mere £1 billion, a third of what had been expected. Therefore as from April 2013, the top rate of 50p will go and be replaced by a rate of 45p.

Mr Osborne also said the government would consult on taxing small businesses with a turnover of less than £77,000 on a cash accounting basis. This is the course of action recommended by the Office of Tax Simplification and would make it much easier for small firms to fill in their tax returns.

The Chancellor had intended to reduce corporation tax by 1 percentage point to 25% as from April, but instead he has doubled that decrease. As from April this year, corporation tax will be reduced to 24%. Again this should help businesses and encourage foreign companies to move here.

At first glance, his measures seem reasonable. But what will the experts think?

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Image: Workers With Upraised Book by Thomas Fisher Rare Book Library

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