The first all-Conservative Budget in almost 20 years offered a few surprise announcements which will no doubt catch the eyes of the business community. While it's the welfare reforms that are currently claiming the headlines, there were plenty of welcome propositions that continue to reinforce the Chancellor's stated commitment to support UK business, tempered with the usual tackling of tax avoidance that we've become accustomed to hearing in recent years. 

Further cuts in Corporation Tax to a rate of 18% by 2020 are in-keeping with this Government's objectives to continually improve the attractiveness of the UK economy to investors worldwide. This was an unexpected 'giveaway' to businesses and further increases the UK tax regime's profile on the global stage.  Banks are likely to welcome a switch away from bank levy to profits-based taxation – although there will inevitably be winners and losers from the changes. 

Smaller businesses will have also noted the Chancellor's promise to maintain a permanent Annual Investment Allowance of £200k from 2016 and further relieve some of the National Insurance burden. We also heard the Chancellor confirm the introduction of an apprenticeship levy scheme, aimed at tackling skills shortages and providing opportunities for young people, which many businesses in our region will likely be interested to provide input into as the Government consults on how it should be implemented. 

As has become a theme of the Chancellor's recent Budgets, some of the relaxations offered to small businesses were countered with proposals to tighten the rules for larger businesses, including the acceleration of the corporation tax payment cycle for large taxpayers by three months to move towards 'alignment' of tax payments with the point at which the profits are generated. By bringing forward the payment dates, this measure alone is expected to provide a significant temporary cash flow boost to the Treasury over 2017-19.

To further balance the books, the Chancellor is forecasting to pay for a large proportion of the more generous corporate measures by overall increases in the taxation on banks via an 8% 'surcharge', along with changes to the taxation of dividends, which will certainly be met with great interest by all business owners. 

In an economy in which we've recently started to see a significant boost in M&A activity, the Chancellor has, with effect from today, announced a measure to eliminate tax deductions that companies can currently enjoy on purchased goodwill. While not expected to be one of the larger revenue drivers for the Treasury, this will no doubt impact on the nature of negotiations between businesses with immediate effect.

Looking to businesses with overseas interests, the Chancellor's anti-avoidance agenda has been ever-present throughout all of his recent Budgets and this one was no different. The announcements included further tweaks to our Controlled Foreign Companies regime, and further investment in HMRC to invoke a 'special measures' regime on businesses that are 'persistently' aggressive. The Chancellor's forecasts include year on year increases in the tax take as a direct result of providing further resource to HMRC's compliance teams. 

From a local perspective, much coverage in the Chancellor's speech was given to the 'Northern Powerhouse', with significant emphasis on the effect of this in the North West of England. Clearly, the impact of this on our local economy in the North East remains up for debate but it was made clear that it will stay firmly on the Government's agenda.

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