George Osborne’s second Budget certainly wasn’t an easy one to deliver as he continues unabated with   the government’s deficit reduction programme whilst at the same time attempting to reinvigorate the economy.  With the Office for Budget Responsibility downgrading growth forecasts for the year ahead, it might be reasonable to suppose that the growth initiatives are either inadequate or that their impact will be lagged, or even a combination of the two. Only time will tell!

Following the Budget, Streets Chartered Accountants held it’s roadshow of seven presentations with its Stevenage event hosted in conjunction with Hertfordshire Chamber of Commerce.   Delegates, which included business owners, company directors and those from professions, provided a useful insight into the views of individuals and businesses alike as to the affect of the Chancellor’s announcements.

Overall, delegates felt either about the same or more optimistic about the economic outlook.  It would appear that the proposed reduction in Corporation Tax by 2% from April and 1% in each of the following three years was perhaps the single most influential factor in terms of a sense of optimism.  The overall level of optimism was boosted further through the indication that the 50% tax rate will only be for the short term. Measures to alleviate the cost of motoring were a welcome boost, particularly the reduction in fuel prices by 1p a litre, the scrapping of the fuel duty escalator and an increase in the HRMC allowable business mileage rate from 40p to 45p.

Looking to the new financial year ahead, the Budget served to highlight a number of financial planning matters that need to be considered.   Perhaps one of the key measures is the proposed reduction in the Annual Investment Allowance in April 2012 from the current limit of £100,000 to a new limit of £25,000.  Certainly any business thinking of making a significant capital investment will need to consider the timing of such expenditure to ensure they maximise the reliefs available to them.

In terms of personal investments, the current income tax regime compares less favourably with the lower rates of capital gains tax and as such, where possible, it is perhaps worth looking at switching any investments that produce significant income streams to investments designed for capital growth, particularly for those in the highest income tax bracket.

For those looking to maximise income and minimise tax, in situations where a husband and wife have significantly different levels of income then it is worthwhile looking at switching income between the higher and lower rate tax payer.  Equally the new lower rates of corporation tax and higher national insurance costs make it increasingly tax efficient for those trading as a sole trader or in partnership to consider incorporating as a limited company.


Looking at the challenges faced by businesses over the next 12 months, it appears, from the feedback from those attending Streets’ Budget presentations, that many established businesses share common concerns and are focusing on the need to maintain business profitability through stabilising or achieving an increase in sales activity. This appears to be against a background of stagnant markets and an inability to develop or finance growth strategies.  It would seem the next 12 months is a time when the support of proactive accountants and business advisers will be paramount if we are to see a shift from the status quo towards a growing economy.

Streets Chartered Accountants, a top 30 UK accountancy firm.  Telephone 0845 880 0320 or email or visit