Simpkins Edwards LLP: Reaction to the Budget 2016

Adrian Hemmings, partner at Simpkins Edwards LLP, commented:

“This budget seemed to be the most technical we’ve had in recent times, compared to the more politically charged announcements of the past couple of years with a raft of smaller measures across the tax landscape.

“The Chancellor has confirmed a series of measures such as the tampon tax, insurance premium rise to fund flood defences, tightening the VAT rules for online traders, NIC on termination payments and the anti tax avoidance initiatives that are what I would term ‘sensible tinkering’. From a commercial perspective I would say he’s addressing anomalies by making comparatively small adjustments rather than significantly increasing revenue from any one group.
“Changes to reduce the rate of capital gains tax will be popular for many, but once again the Chancellor took a swipe at private Landlords with the current rates held for sales of residential investment property. Your family home remains exempt from CGT.

“The sugar tax is a more controversial one and has been met with uncertainty from the City, with shares in major soft drinks manufacturers already down. However, multinational companies will been seen by the general public as ‘being able to take the hit’ and many will view the tax as a positive step towards alleviating the health issues linked to sugar that are featuring so heavily in the media at the moment.

“The lifetime ISA for under 40s appears to be a winner but it will be interesting to see how this impacts on the auto enrolment pension scheme, as there may be cases where one cannibalises the other as people weigh up the options for their long term savings.

“From a regional point of view, the changes to commercial stamp duty, the raising of the threshold for small business rates and the freezing of fuel, beer and cider duty are all good news for our local economy – particularly small businesses.

“Overall, it’s reminded us of previous ‘mid-term’ Gordon Brown budgets where most people get a small break and a piece of good news. However, we’ve learned from the past that sometimes the more negative details emerge in the coming weeks and months as we learn more about how the initiatives will actually be rolled out – so in that sense we should remain cautious.”