ACCA has welcomed the move to cut UK Corporation Tax to 21 per cent by 2014. 'This will help UK Plc. to look like an attractive investment destination,' said Chas Roy-Chowdhury, head of tax at ACCA.
'ACCA welcomes the measures against exotic tax avoidance, along with the efforts to prevent 'unfair transfer pricing' by multinationals to ensure they pay an appropriate amount of tax on profits generated in countries in which they operate,' he added.
'The overall increase in the personal allowance to £9,440 is welcome but it should be available across all tax bands. The below inflation rate increase of some allowances and bands, such as the level at which the 40 per cent tax rate starts is not welcome. It just increases the fiscal drag which has been operating in overdrive under the coalition Government,' said Chas Roy-Chowdhury.
ACCA has concerns elsewhere. While the reduction of pension tax relief to £40,000 per year may be presented as affecting only the richest, it will also have a significant impact on public sector workers earning even £50,000 per year.
'This cut gives out all the wrong signals to those who are trying to save in order to stay independent in old age. It might have a short term impact as the reduced relief may potentially mean people will spend more and help stimulate the economy,' said Chas Roy-Chowdhury.
But the area of the economy which will feel the most pain is in the public sector, warns ACCA.
Gillian Fawcett, head of public sector at ACCA, said: 'This has created Mission: Impossible for finance professionals in the public sector. It will be difficult to motivate staff to be innovative and creative when they may be feeling undervalued, having not seen a pay rise for three years, with no expectation of an increase in the foreseeable future, with many living with job uncertainty.
'Another issue is how these efficiencies and cost savings will be managed since performance management across Whitehall is perceived to be weak. An example of this absence of management is evident in relation to spending on academies and free schools.
'While the Government has announced extra spending in this area, there has to be concern about how this will be spent, since a recent report by the National Audit Office showed that there had been a £1 billion overspend on developing these schools by the Department for Education,' said Gillian Fawcett.