Bath business experts have given a mostly positive reaction to Chancellor George Osborne’s Autumn Statement and Spending Review.
Ian Bell, executive director, Bath Chamber of Commerce and the Initiative in Bath & North East Somerset – part of Business West – said it contained some positive news for the region.
“Once again the ‘builder’ Chancellor has used the tools at his disposal to create a statement that the majority of businesses will applaud,” said Mr Bell, pictured below. 
“It was good to hear the Chancellor single out the South West as a centre for economic growth.
"There were also several announcements to spark local interest in Bath, such as the creation of a new Bath and Somer Valley Enterprise Zone.
“The announcement that local authorities will be able to keep all business rates is excellent news for Bath and North East Somerset because we currently receive back from the Treasury about £20m less than we raise.
“It will be interesting to see whether councils take up the opportunity to raise council tax by 2% to pay for social care. Councillor Charles Gerrish, cabinet member for resources on B&NES Council, told me they would only consider imposing the rise if other strategies to save money and increase income don’t deliver the outcome they want.
“While councils are being allowed to keep all the receipts from selling assets, it seems very unlikely that B&NES Council will take up that option. In fact, far from them looking to reduce their commercial estate, they are actually considering the acquisition of more property which they hope will generate additional income.
“The Chancellor mentioned that elected mayors will have powers to raise business rates, but only if supported by business. That seems to mean that if we go down the route of a ‘metro mayor’ for the West of England then there will have to be a formal way in which business is involved in decision making, which is a welcome clarification.
“He also went on to announce a package of measures to tackle some of the fundamental issues that stand in the way of long-term prosperity.”
He said more funding for infrastructure was a much needed win.
“Businesses can only operate as well as the environment they are in, and the announcement that Britain will be spending a higher proportion of its income on infrastructure than at the start of the parliament will be met with applause,” he said. “This included big increases in the transport capital investment budget, with a 50% increase.
“The Chancellor then turned to ‘raising the skills of the nation’, which is a priority in the West of England. High youth unemployment and business skills gaps are a cause for embarrassment and a package of reform for education, along with details of the Apprenticeship Levy will be welcomed by businesses. Although there are reservations as to how this will work in practice.
“It was also good to see political emphasis put on fixing the housing crisis, as our region suffers from increasingly high housing costs compared to other areas in the country. However, it is also worrying to see that the Office of Budget Responsibility is still predicting that house price rises will continue to outstrip earnings.”
Dominic Bourquin, pictured right, corporate tax partner at Bath accountancy firm Monahans, said many working families would be heaving sighs of relief as they absorb the implications of the spending review. 
“Those in receipt of tax credits, who may have feared those credits would diminish or even disappear, have instead seen the Government perform an unexpected U-turn, leaving many families with several hundred pounds net more a month,” he said.
“In the wake of rumours of substantial cuts to tax credits, it’s a bonus that many will not have dared anticipate. However it is likely these changes will bite later when Universal Credit comes online in the next couple of years.”
He said this U-turn would partly be paid for by big businesses, through the new apprenticeship levy on corporates whose wage bill exceeds £3m per annum, with the balance coming from increased Stamp Duty on buy-to-let properties and second homes.
“Parents of three- to four-year-old children will reap new benefits, if they work more than 16 hours a week and earn less than £100,000 a year,” said Mr Bourquin.
“From 2017 they’re set to receive 30 hours of free child care a week – a welcome boost to those families where a parent wants to return to work, but who have been caught up in a Catch 22 situation of being unable to afford to do so.”
He said the chancellor had also reached out a helping hand to those trying to get on the housing ladder.
“In response to the mounting difficulties faced by those in their 20s and 30s who want to buy their first homes, he has committed to doubling the national housing budget. At £2bn, that’s hardly a princely sum in the greater scheme of things, but it should create 400,000 affordable homes, allowing 160,000 new starter homes to be built on publicly-owned land, and offering 135,000 buyers shared ownership on homes that will be on sale at 20% discount on market rates.
“The Government is also introducing the right for housing association tenants to buy their homes – no doubt a welcome message for many existing tenants, although it does beg the question as to where housing associations will source their rental stock in future.
“We’re told that the planning system will be overhauled, to make it more easy for developers to build, too. Good news if you believe it – but forgive me if I remain sceptical. We’ve been here several times before.”
For anyone involved in one of the larger corporate tax avoidance schemes, it was time to start being very afraid, said Mr Bourquin.
“HMRC is going to be investing £800m in clamping down of tax avoidance – and seems to be confident it can reap ten times that amount in revenue. Tax avoidance erodes the country’s tax base, as well as eroding confidence in HMRC itself. It sounds as if the taxman is finally saying enough is enough.
“Meanwhile, businesses large and small that were expecting to wave goodbye to small business rate relief have had a reprieve – the Chancellor has extended the scheme for one more year.” 
Malcolm Emery, a partner at regional law firm Thrings – which has an office in Bath– said the Chancellor, in what was effectively his fourth Budget speech in less than 12 months, had taken the opportunity to announce a series of vote-winning giveaways to businesses and individuals.
Mr Emery, pictured right, who is a dual-qualified chartered tax adviser and solicitor, added that Mr Osborne still appeared to be in austerity mode – “and with a large black hole to fill it is arguably with good reason”.
He added: “The rise in the basic State pension, protection of police budgets and the increase in financial support for education will have been welcomed by many people in the UK. However it is the Government’s decision to scrap proposed changes to tax credits that will inevitably attract the headlines, with some of the required £4.4bn being met by an increase in Stamp Duty land tax payable on buy-to-let properties.
“Many businesses will welcome the abolition of uniform business rates, the setting aside of £12bn for a Local Growth Fund and the creation of 26 new or extended enterprise zones. Meanwhile the introduction of an apprenticeship levy – set at 0.5% of the employer’s wage bill – will aim to deliver three million apprenticeship starts by 2020, with each employer receiving a £15,000 allowance to offset against their levy payment.
“Little was offered by the Chancellor on further tax cuts, although this is perhaps not surprising as many are still working through the reforms he proposed in his summer Budget to non-domiciled individuals living in the UK and the taxation of dividend income. Both reforms will impact on the economy, particularly for those families who use companies for business and wealth preservation purposes.
“Mr Osborne also talked about the digital age and its ability to facilitate costs savings within HMRC by creating individual accounts for each and every taxpayer. Earmarking an additional £800m to tackle tax evasion highlights the Government’s commitment in this area, with the new measures forming part of his plans to ensure the UK has the ‘most digitally advanced’ tax system.” 
Jon Miles tax director at Bath accountants Richardson Swift, pictured right, highlighted the likely impact of the buy-to-let Stamp Duty increase on the city – where many people have invested in residential property – and two changes which could affect local businesses.
He said: “The announced increase in Stamp Duty Land Tax rates from April 1, 2016, for additional residential properties could affect many landlords in the Bath area, who may wish to consider bringing forward planned 2016 completion dates.
“The planned rise is potentially quite significant, and affects properties above £40,000, which could prove unpopular for many. Although the stated aim of this indirect tax measure is to redistribute funds to areas where the impact of second homes is acute, this will only be achieved if the new tax rates do not significantly put the brakes on purchases of investment property in key areas. This appears to continue the attack on the investment property market that began in the previous Budget.
Meanwhile, some local companies which might have some of its shares held by a favoured “personal” charity, or may want to, will need to be aware of a change brought in by the Autumn Statement.
“Where loans were made by the company to the charity a tax charge on the company could arise, but a partial exemption could apply for loans made after today,” he said.
“Whilst this might make having a charity as a shareholder more attractive, there will be conditions to meet before you can be sure that loans to the charity will escape a tax charge. It is also subject to today’s proposal being agreed by Parliament next year, and if it is not agreed, it appears that any loans made from today would still be subject to the tax charge that has applied to date.”
Thirdly, changes in the statement mean intellectual property (IP) or other similar intangible assets can no longer be transferred by partnerships or limited liability partnerships (LLPs) to a partner that is a company, which then benefits from special up front corporate tax relief.
“This measure is effective from today and could be relevant for professional services firms in and around the Bath area that are currently structured as partnerships or LLPs, if they are considering moving intangible asset value into a corporate environment,” he said.
