The Budget has little to offer design groups, according to accountancy firm Willott Kingston Smith, although shareholders and owners of design groups wanting to retire early can benefit from the changes to capital gains tax.
“A lot of creative people tend to retire young, so this certainly applies to the design industry,” says WKS partner Bob Willott. He adds that otherwise the Budget had “not a lot to offer” to consultancies.
The changes to capital gains tax will allow people retiring at 50, instead of 55, and selling their business to take the first 250 000 made from the sale free from capital gains tax. It also permits them to pay only 50 per cent of normal capital gains tax on the next 750 000, explains Willott.
Meanwhile, the change in corporation tax will make little difference to smaller consultancies, Willott explains. Consultancies making less than a 300 000 annual profit will save 1 per cent in corporation tax. But if they make over 300 000, they will pay 35.25 per cent on it, as opposed to the 35 per cent they paid this financial year. “It’s like giving with one hand and taking away with the other,” Willott adds.
From April 1997 employers’ contributions to national insurance will drop from 10.2 per cent to 10 per cent.