2013 Budget Report
Are you a wine drinker? If so, you will have been disappointed that the Excise Duty on wine has not been cut as it has been for beer, whilst the Chancellor is clearly hoping that tomorrow’s headlines will repeat his phrase “penny off a pint!”
Mr Osborne may be disappointed in this regard though, as a quick trawl of headlines at the time of writing indicate that the help for home buyers and the reduction in fuel duties are the headlines, rather than alcohol.
From a tax and accountancy point of view, however, two measure share the headlines:
- The two Corporation Tax rates aligned at 20% from April 2015
- Personal Allowance increased to £10,000 from April 2014.
Neither measure is a surprise. However, whilst the first may indeed be hailed as a simplification, the second has a nasty sting in its tail. The increase in the personal allowance is linked to a reduction in the basic rate band. Thus you may get more without paying any tax, but equally you don’t have to earn as much before you are paying tax at the higher rate of 40%.
One of the first things tax and accountancy students are taught is the difference between (legal) tax avoidance and (illegal) tax evasion, but over the last few years politicians of all parties have been blurring the boundaries between the two. The furore over the tax affairs of Jimmy Carr, Starbucks, and Amazon - inter alia – have shown how legality is no longer enough in the tax world.
Last year Mr Osborne called tax avoidance “morally repugnant” – for 2013 he restrained himself by talking about “aggressive” tax avoidance only, but released an armoury of further weapons in his war against avoidance.
Twice in his speech the Chancellor used the phrase “aspiration nation.” Just as 12 years ago linguistic pedants were wondering how you could declare war on an adjective, now the linguistic pedants at robinson+co are wondering just what this juxtaposition of two nouns means.
There can be little doubt that the two headline tax measures – corporation tax at 20% for all companies – and a personal allowance of £10,000 – are impressive accomplishments,” says Victoria Bishop, “but only time will tell whether they do allow us as a nation to reach the aspiration with which Mr Osborne ended his speech: ‘... a Britain ... to be prosperous, solvent and free ...’.
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