There has been a suggestion that the Tories won the recent election due to the numbers of votes cast by the country’s entrepreneurs, more specifically the estimated 5 million owner-manager businessmen and women of the country. If that is the case then they may have been disappointed by the “big and bold” announcements of yesterday. The announcements had the aim of making the UK a high wage, low tax, economy with little reliance on the welfare state. These were election manifesto promises delivered. Although there is to be a cut in the corporation tax rate and permanence to the tax relief on purchase of plant and machinery, the small business owner may feel that the welfare bill has been privatised. This is to the detriment of the entrepreneur.

The announcements about an increase in minimum wage should offset some of the cuts in welfare benefits offered to working families. As it is the employer and not the state who pays salary, the shift in burden moves to the entrepreneur. Although a £1,000 increase in employment allowance will help the employer mitigate the increased costs of employment, the costs of rising wages will fall on the shoulders of employers. This is in addition to any apprentice levy the employer may have to pay.

The government would point to the cut in corporation tax rate as also helping contribute to the costs of employment. What the entrepreneur would reply is the increased tax cost of paying company dividends negates any corporation tax reduction. Assuming the corporation tax cut equals the dividend tax rise this leaves an increased wage bill as the cost for the entrepreneur.

The extent that the government’s view or that of the entrepreneurs is correct will depend on the size of the workforce, the profit made by the business and the wages paid to employees. In simple terms it will depend on facts and circumstances.

Facts and circumstances are key in giving tax advice. For example, given the correct facts and circumstances it is suggested that there are at least seven different salary levels which lead to detailed tax considerations. This reinforces the statistic that the UK has the longest tax code in the world. A recent press article indicated that the UK’s code is about sixty two times longer than the most efficiently drafted tax code and has trebled in size since 1997. It seems perverse that the existence of an Office for Tax Simplification is being put on a statutory basis at the same time that the tax code is growing at an alarming rate.

An area in which the tax code is mercifully brief is the tax treatment of non-domiciles. With the announcement that longer term residents of foreign extraction will be taxed as if they are UK citizens together with changes to the tax structures they often use will, no doubt, expand Britain’s lengthy tax code. I recently had the opportunity to hear an MP describe the budget process and he described George Osborne as “a tinkerer” in the context of making subtle changes to tax breaks and charges. If the description is true then I can assume Britain will retain its gold medal position in the tax code size challenge.