I applaud George Osborne’s aim to move to a “higher wage, lower tax, lower welfare economy”, not for any partisan reasons, but on the grounds that economies which move in the other direction are mathematically certain to fail, and it’s about time some people woke up to that fact.
It is frustrating that although there were a number of good things in the budget these were tarnished either by undue complexity, or because they were a step in the right direction but did not go far enough.
Typical of the former was the new inheritance tax allowance for those leaving the family home to their children – this is not due until 2017, will take another three years to phase in fully, and starts to taper away if the whole estate is worth £2m.
Typical of the latter is the raising of the threshold at which 40% tax is payable. The actual increase was disappointingly small and the threshold is still very low compared with the rise in average earnings since the 40% band was introduced.
Nevertheless, it all helps, and gives out the right messages. Another positive move was the freezing of the Annual Investment Allowance at £200,000. This is admittedly less than the current £500,000 but this allowance has see-sawed between £25,000 and £500,000 since its introduction making it impossible to plan major capital purchases with any certainty, and causing confusion to directors of companies whose accounting years straddled the timing of any such change, necessitating counter-intuitive pro-rata calculations.
The really bad apple in a pleasant rather than mouth-watering bowl was the denial of tax relief for amortising purchased goodwill. This started last year when relief was denied to those who purchased goodwill from connected parties because of perceived abuse (never mind that all but a minority of such transactions were carried out for bona fide commercial reasons). I cannot understand why this should now apply to transactions between third parties as it will have a negative affect on many business sales.
Anyway, it could have been a lot worse. It could have been an Ed Balls budget.