Brooksonís reaction to the pre-Budget Report

The pre-Budget Report was delivered against a backdrop of ëeconomic uncertainty not seen for generationsí and ëextraordinary, challenging times for the global economyí – it can be summarised as ëspend now – pay laterí.

During the speech, Alistair Darling announced tax cuts which he valued at 20bn and acceleration in certain areas of public spending. Both are intended to stimulate growth in the economy and reduce the length and severity of the UK recession. The tax cuts and other financial incentives were focused on low earners with tax rises specifically targeted on high earners.

As a result of the measures, borrowing is expected to rise considerably in the coming years. In order to then stem the increase in borrowing by 2015/16, he announced tax rises and reductions in the growth in Government spending beginning in 2011.

Martin Hesketh, MD of Brookson, one of the leading providers of accountancy, tax advice and other support services to contractors, comments on Alistair Darlingís pre-Budget Report:

ìOn first impressions, this is a reasonable pre-Budget Report for recruitment agencies and contractors alike. The industry will particularly welcome the Chancellorís decision to leave the tax rules for Umbrella companies unchanged, and his commitment to enforce the current legislation. Compliance has certainly always been at the heart of our business and we believe that the announcement provides the industry – recruitment agencies, contractors and service providers alike – with a golden opportunity to get its ëhouse in orderí to ensure that no further legislation is required in this area.

ìIndeed, this complements the feedback provided by Brookson through SPA (Service Providers Association) to HM Treasury which supported stricter enforcement rather than additional regulations.

One of the main focuses of the 2008 PBR appears to have been small businesses, specifically, providing investment and advice led schemes to enable these businesses to weather the current economic climate.

Martin continued: ìDemonstrating his commitment to further ease SMEís finances, Alistair Darling introduced measures to enhance SMEís access to Government contracts and offered more generous tax relief to businesses making losses by temporarily extending the carry-back of these from one to three years up to 50,000 with immediate effect.

ìIn addition, 3bn worth of capital investment in public schemes will be brought forward to benefit, in particular, the construction sector.

ìThe Chancellor also took the decision to postpone the 1% increase in corporation tax as well confirming that income shifting legislation will be deferred. Both of these measures are beneficial to small businesses.

ìLooking at more of the negative points from the Chancellorís announcements, the increase in National Insurance contributions by 0.5% for employers and employees from 2011 is bad news for the industry as a whole. And, while the decrease in VAT has meant that consumers get more for their hard earned cash, the Government seems to have little regard for the amount work required for companies to change their internal systems to reflect the amendments within the tight time frame.