Ernst Schumacher wrote a very famous book called “Small is Beautiful” which was influential in Thatcherite thinking. He is also well known to us in Devon as the Schumacher Centre is at Dartington Hall. When I was younger I also knew his widow.

Whilst Schumacher’s thinking might have fallen out of fashion in the dot com boom years and the noughties, it looks like it might be making a comeback as smaller corporate businesses definitely look like one of the winners from George Osborne’s latest budget. Whilst we have got very used to George Osborne’s boasts over numerous budgets that “we are the builders”, about the Northern Powerhouse and most recently about the Midlands Engine, he has concentrated on giving us a stable environment for business tax planning. Also, whilst The Times must take much of the credit, there has been a focus of concentrating on unacceptable tax avoidance by large multinationals and the government has been very committed to the OECD BEPS project. Whilst George Osborne has certainly undertaken some of the international tax competition that is in itself considered unfair, he does seem to have a vision for the future here and reducing corporation tax rates to 17% is all very positive.

As part of the budget documents, a “Business tax roadmap” has been published and this does appear to be a considered document and gives us a framework to advise clients into the future. Whilst tax policy is always uncertain, we can at least be reasonably certain about future corporation tax policy. This should assist business investment.

Further, there is a focus on small companies at the expense of large companies. From April 2017 there will be more generous loss relief rules for corporates which will be more flexible and will reduce administration costs. Whilst a restriction has been introduced for larger corporates in terms of using their losses brought forward – this will not be the case for companies with profits less than £5m. The big money raisers in the corporation tax policy announcements are all to do with increasing tax on multi-nationals and one could construct a David vs Goliath narrative around a Chancellor supporting smaller businesses against the behemoth multi-nationals. Certainly in previous budgets George Osborne has been accused of favouring big business, so this does seem a noticeable change. Finally, small business rate relief is definitely a measure assisting smaller businesses.

Then there is the issue of the cut to capital gains tax and the new investors’ relief. Whilst the new investors’ relief for those putting money into unlisted companies is going to add complexity, it may be more attractive for many investors than claiming enterprise investment scheme status and should boost investment in smaller private companies. By pushing up dividend tax rates there is clearly an incentive to leave money in companies and reinvest it for the longer term and for business owners to roll up their sleeves and graft away with the expectation of a longer term reward.

In many ways the capital gains tax regime is returning to something closer to the business asset taper regime which was abolished in 2008 as part of a simplification measure. I recall arguing with Vince Cable in a House of Commons meeting room about the justification for having lower capital gains tax rates than income tax rates and losing to his superior debating skills. However I think what we are seeing now is the end of the Vince Cable influence and a very clear and substantial gap between capital taxation and income taxation as far as profits in corporates are concerned. Very possibly the gap is too big to be sustainable and it is quite clear that we will have clients wanting to achieve capital taxation at the expense of income taxation – especially where the amounts involved are substantial.

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