Scott Bentley, partner at Truro-based accountant Winter Rule, has offered his views on today’s Budget.
He said: “The increase to VAT will hit everyone and impact on prices of goods and services but as with much of this Budget, we have been groomed to expect a rise.
“Clearly it is generally the end consumer that will ultimately bear the cost but other entities such as charities will be hit in the region as they are often unable to recover fully the VAT on costs that they incur.
“The public sector is a very significant provider of higher paid year round jobs in county and so the public sector pay freeze will I think have a proportionately higher effect on consumer spending in the county and at the same time the cuts to tax credits and other benefits will bite at those on middle incomes.
“We all knew that the CGT regime was unsustainable whereby someone could be paying 50% income tax but 18% CGT on investments. I was surprised at the increase to the level of lifetime gains to £5M but then again the cost of this does depend on the value of anything actually going up in what are going to continue to be difficult economic times!
“However the changes were not as bad as I feared and clearly the treasury has picked a top rate of 28% as it believes that if the rate were increased beyond this then the actual tax take would go down as people would not actually sell assets but where they had a choice would hold on to them.
“The announcements on the reductions in the tax relief given to businesses on capital investment were expected but due to the number of small businesses in the region, the lack of a major manufacturing base and the way the calculations work I would not anticipate this of itself to have a major impact. I also welcome the fact that these changes have been delayed until April 2012 which gives most businesses contemplating major capital investment time to plan and accelerate spending if possible.
“There was quite a bit on National Insurance and the increase to the threshold at which employers will pay NIC over and above inflation is good news but of course this budget has not altered the fact that rates of National Insurance for both employees and employers are going to increase by 1% from April 2011 as was announced by the previous government.
“The South West is also mentioned as benefiting from the three year holiday on employer NIC contributions for new businesses in respect of the first ten employees they take on. With a potential value of £50K per business this could be a valuable relief to genuine new start up businesses.
“Overall I feel we will feel the pain like everyone else but there is evidence that Cornwall has proven pretty resilient so far in the recession and I think that there are opportunities for us to continue to do so.”