Osborne set to unveil fresh spending cuts

THE first Conservative budget for 19 years will see Chancellor George Osborne slash the welfare budget in a fresh attempt to balance the country’s books.

Wednesday’s Budget will be Tatton MP’s seventh as chancellor, but the first without any Liberal Democrat involvement after the Tories’ election triumph in May and the Lib Dems’ mauling at the polls.

Don’t miss our coverage of the summer budget in association with DSG Chartered Accountants.

Paul Hyland, tax partner at DSG, said: “It’s 19 years since the last full Tory budget,  Ken Clarke’s ‘Budget for  Lasting Prosperity’, was unveiled and the business community wants something with similar aspirations.  

“Of particular interest will be whether the Chancellor delivers the boost which the UK economy so desperately needs by taking bold action on tax cuts.  Cutting the tax rate to 40%  would improve incentives to work and increase the UK’s attractiveness to foreign investors.

“Other business-boosting measures which would be welcome, include ensuring that the UK is the best and most competitive place for businesses and investors to reside.  Restoring the personal tax allowance for all earners would also be a positive step.”

While welfare spending will grab the national headlines and there is expected to be a tough funding challenge for the BBC – which will be asked to contribute £650m to pay for free TV licences for people over the age of 75 – a number of business-friendly announcements are envisaged too.

Small businesses will want to see a commitment to deregulation after it emerged that the cost that small businesses face when complying with regulations is soaring.

Although every government promises to slash red tape, the reality is often the reverse and research by the Knutsford-based campaign group the Forum of Private Business shows that regulatory compliance is costing companies with fewer than 250 employees a combined £20bn a year.

The FPB says this represents an 8.4% surge compared to 2013, and costs every small business almost £15,000 a year on average.

Mr Osborne is widely expected to improve capital allowances – which allow companies to wipe off some of the value of qualifying investments from their tax bills – to encourage firms to improve efficiency, hire more staff and increase exports.

The move is expected as part of a number of predicted measures designed to tackle weak productivity.

For big business, there is likely to be a review of the bank levy and some softening of the stance on green taxes.

Centre stage will be the economic plan for the parliament, putting the elimination of this year’s expected £75bn deficit at itThe Budget will also confirm the end of inheritance tax on family homes worth up to £1m.

Mr Osborne is also expected to tell MPs on Wednesday the threshold at which the tax is levied will rise for couples from £650,000 after April 2017.