How March 2011 budget will impact on future UK inward investment
The continued trend of reducing the rate of UK Corporation Tax started last year from 28% to 23% over the next few years is a positive move to showing the world that the UK is good for inward investment (although not as good as some countries with even lower rates).
On the downside the continued tax on jobs (Employers Social Security) due to come into effect next month seems set to continue at 13.8% - unless there is some measure of relief found in the fine print or inserted in the passage of the bill through parliament.
The other measures introduced help, but may be more akin to tinkering, albeit with good intentions. British Business, including overseas businesses operating here, need less regulation and variations - not more. The setting up of new enterprise zones may be good; we will need to see the detail.
The sop to the British motoring Public is the capping of fuel costs, but it is possible that a similar saving could have been made by each driver by driving more fuel efficiently (and indeed still can be).
Simplifying the tax system for UK Income Tax and National Insurance by amalgamating them into one tax, and making the tax system easier to understand and be compliant with, may yield greater long term benefits. But I am not convinced that there is the will for this to happen. Currently the top rate of tax is 50%, with employee NI at 12%. There will need to be some aligning of when these bands apply, but a combined rate of tax of anything over 50% will be difficult to sell - even if the reality is that both rates together would already reach that percentage.
The BBC news reported that Advertising firm WPP may bring tax headquarters back to the UK.
“I think it looks as though we will make that recommendation [to return to the UK]," WPP boss Sir Martin Sorrell told BBC Radio 4's Today programme.
So from an investor's perspective this is a small step in the right direction, as might be expected in difficult times for UK.