Complification

In recent times HMRC have promised a simplification of the tax laws in this country which should have led to many planning opportunities. Remember the so-called "tax simplification" of pensions in 2006. Not. The subsequent changes led to the coining of the expression "complification". And then there are the swings back and forth as chancellors rethink their predecessors' ideas. Boy oh boy.

Some of the key highlights in the small print from this week's Budget include some more complifications:

- The increase to £50,000 in the annual charge for UK non-domiciled individuals from April 2012 for those who have been UK resident for 12 or more years and who wish to benefit from the remittance basis. The definition of residence will be put on a statutorily defined basis. Then the likes of Green and Stelios should be left in peace for a bit.

- The reduction in the main rate of corporation tax to 26% from April 2011 and by 1% a year thereafter to 23% in 2014. That should help offset the impact of the proposed cuts in capital allowances.

- The increase in the personal allowance to £8,105 in 2012/13, with a corresponding reduction in the basic rate band to £34,370. That should add a big slew of higher rate taxpayers to those already paying 40% and 50% tax.

- The increase in the lifetime limit for CGT entrepreneurs' relief from £5 million to £10 million - which sounds good but won't actually affect too many people. Except maybe Green and Stelios.

- The possible integration of income tax and NICs. But how on earth will they do that without huge "complification?"

The Smart Frog makes no apologies for sounding cynical. Let's see if time proves him wrong.

OK, so what d'ya reckon, Mr Small Business Man?

So, were there any presents in it for you? This was never going to be a tax cutting budget, but it wasn't really that bad, was it?

The Smart Frog quites like the Annual Investment Allowance, an allowance which enables 100% of certain capital expenditure to be set against business profits (hithereto only available at a maximum 55%). The increase in the AIA to £100,000 (previously £50,000) will affect a relatively small number of businesses (those with capital expenditure between £50-100k) but they may well be a crucial sector in the economy. It may actually enable genuine investment by that minority of small businesses who want to invest and grow.

When the Smart Frog was told that the Chancellor might double entrepreneurs’ relief from Capital Gains Tax he assumed that also meant CGT rates were going up, but no they didn't. A nice little surprise there, then.

This of course allows the Chancellor to hold himself out as a champion of small business, as the Tories are talking about cutting the main rate of Corporation Tax and abolishing the AIA – which of course helps big business. The Smart Frog suspects this is the big idea here, because nobody wants to go into an election tagged as a friend to the banks.

Very importantly (and despite rumours to the contrary), the business tax payment support service (designed to help small business pay their tax by installments through the current difficult economic climate) is to continue. An independent review is to be required, but only where debt exceeds £1m. Not a problem for small business, then.

Usefully, the extended trading loss carry back provisions (for both income tax and Corporation Tax) will be extended for another year. Hopefully that takes them close to the end of their useful lives – anyone still making large losses by then is likely to have gone out of business!

The abolition of the 'furnished holiday lettings' provisions will still be going ahead, despite protestations by The Smart Frog, as well as the various accountancy bodies. Expected clarifications have not yet surfaced. This will be a mess.

Overall, though, there was no harm done to small business, and even some improvements. What d'ya reckon?