Independent chartered accountants WBV Ltd has expressed fears that measures introduced in the Chancellor’s Summer Budget will affect the profit margins of SMEs.
George Osborne’s seventh Budget – the first of this Conservative Government – heralded a decrease in Corporation Tax but saw a rise in dividend taxes.
David Rowe, partner at the Neath and Swansea based firm said, “SMEs will see significant changes to dividend taxation from April 2016, which will impact on the overall tax rates and the effective tax rates on extracting profits.
“Furthermore, the introduction of the National Living Wage is going to be a big cost for SMEs. Even though it has been marginally offset by an increase in the employment allowance, the effect of paying higher wages – which is a fixed overhead – will ultimately be smaller profits.”
In a bid to create what George Osborne called “a permanent change to incentivise investment”, the Annual Investment Allowance will no longer fall to £25,000, but will be frozen at £200,000 from 1 January 2016.
However, WBV notes that the temporary £500,000 limit was set to expire on 31 December 2015, but will now be a permanent relief available at a reduced rate of £200,000.
Added Mr Rowe, “It is a shame that the Chancellor didn’t choose to keep the Annual Investment Allowance at the current level and show a true commitment to boosting productivity for SMEs for the rest of the parliament.”
For more information please contact:
David Rowe
WBV Limited
Tel: 01639 635555
Email: davidrowe@wbv.ltd.uk
The Third Floor
Langdon House
Langdon Road
SA1 Swansea Waterfront
Swansea
SA1 8QY
Tel:01792 652108
Woodfield House
Castle Walk
Neath
SA11 3LN
Tel: 01639 635555
WBV Ltd is a member of the prestigious UK200 Group of independent practicing chartered accountants with offices throughout the UK and associates overseas.
