Budget 2011: Osborne urged to take ‘all-action’ approach

CHANCELLOR George Osborne has been urged to use tomorrow’s Budget to help make the UK a more attractive place to do business.

Analysis by accountancy firm Ernst & Young suggests top earners – those earning more than £150,000 – are paying tax at 52%.

Graeme Crawford, partner and head of tax at Ernst & Young in Birmingham, said although the level of income tax is comparable to other countries, few levels of tax relief are available in the UK for those high earners who fall into the top rate band.

Mr Crawford said at present there is also limited relief for investment in higher risk businesses and few ways to divert income into a lower or no tax rate.

He said: “To help fulfil the government’s promise that this will be a Budget for growth, the Chancellor may announce an improvement in the capital gains tax entrepreneurs’ relief in an effort to stimulate locally owned businesses.

“We could also see an indication for the future that income tax rates will be lowered, but it may still be too early for that.”

It has been suggested that Mr Osborne may use Wednesday’s Budget to signal further work on a possible merger of the income tax and national insurance regimes to lift the burden on businesses.

Mr Osborne’s Budget is expected to include “sweeteners” to low earners, motorists and holidaymakers but handouts are likely to be modest.

And in a letter to Mr Osborne, the Confederation of British Industry has reiterated its call for the Chancellor to deliver an “all-action” Budget to boost growth and jobs.

The leading business group has urged Mr Osborne to focus on boosting export performance, “unleashing” domestic investment spending, and removing red tape for high-growth firms.

John Cridland, CBI Director-General, said: “The Chancellor must do all he can to create the right conditions for businesses to flourish and create much-needed employment.
 
“We want an all-action Budget that will boost exports, unleash investment and remove barriers for high-growth firms. That means improving export finance for fast-growing smaller firms, tackling delays in the planning system and making the UK a more attractive place to invest by enhancing the competitiveness of the tax system.”
 
TheBusinessDesk.com has teamed up with Ernst & Young to bring our readers up-to-the-minute, comprehensive coverage of the event.

TheBusinessDesk.com will send a breaking news email to readers within minutes of the conclusion of the Chancellor’s speech, including analysis from experts at Ernst & Young.
A further comprehensive email news alert, including video commentary from Ernst & Young experts and all the major Budget headlines, will also be sent to readers tomorrow afternoon as well as being available to read on our website.

TheBusinessDesk.com will also be blogging live during the Budget and video analysis will be available through our dedicated video channel, TheBusinessDesk.tv.