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Unruffled by election uncertainty


Bullish businesses are unruffled by the prospect of an upcoming election, despite the current high- profile debate around business‘ confidence in political parties.


According to BDO‘s Business Trends report, business optimism and output still remain high despite the most unpredictable election in a generation being only three months away.


Both the BDO Output and Optimism Indices, predicting economic growth three and six months ahead respectively, remain resolutely positive. The BDO Optimism Index maintained a robust reading at 104.4 and the BDO Output Index


continued positively at 102.9, both well above the 100 mark representing expansion above the long-term trend rate.


Companies‘ hiring intentions also remain positive. The BDO Employment Index, measuring expected employment growth, remained well above its long-term trend at 111.6, signalling that firms expect businesses to keep hiring in the near term.


Continued low oil prices, low inflation, strengthening wage growth and the potential for increased consumer spending have created an economic thaw for the economy. Confidence


‘Mansion tax is outdated and unnecessary‘


New research published by the Centre for Policy Studies reveals that any case for a mansion tax is now redundant as recent tax reforms have significantly increased the tax burden on higher-value properties.


The Shrinking Case for a Mansion Tax by Lucian Cook, director of research at Savills, shows that properties that would be targeted by a mansion tax have already been subjected to significant tax hikes since the policy was first mooted five years ago.


Recent stamp duty land tax reforms have increased the tax burden on ‘mansions‘ by £1.1 billion – the top 1.6% of households now pay almost half of all SDLT.


The introduction of, and recently- increased rate of, an annual tax on enveloped dwellings has added at least another £100 million a year to the tax paid by ‘mansionism‘, closing the loopholes which existed when the mansion tax was first proposed.


As an example, the tax paid on a house now being sold in SW London for £2.5 million has increased by 405% since 2009.


Cook commented: “The recent reforms of property taxation are raising as much from high-value properties as any mansion tax. If in addition to these reforms, a mansion tax were introduced, it would add a layer of complexity and unfairness into the tax system for residential property. The economic impact of a mansion tax is impossible to quantify but would clearly be damaging, not least in seriously undermining the attraction of the UK to overseas investors.“


Tim Knox, director of the Centre for Policy Studies, commented: “For economic recovery, the UK does not need new taxes targeted at the aspirational, the successful and sometimes the fortunate. Rather, it needs lower, simpler taxes which encourage innovation and productivity and which stimulate, not penalise, wealth creation.“


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – MARCH 2015 www.businessmag.co.uk


is particularly evident in the manufacturing sector which – responding positively to low input prices – maintained a balmy economic outlook.


Commenting on the findings, Malcolm Thixton (pictured), lead partner at accountancy and business advisory firm BDO LLP in Southampton, said: “This month‘s report shows that businesses can and will tune out of the parties‘ electioneering to focus on what really matters – their business prospects. By discounting the political noise and taking a realistic view of the economy‘s strengths, businesses are remaining cautiously optimistic.“


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T: 023 8022 6891 E: enquiries@ericrobinson.co.uk www.ericrobinson.co.uk


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