Business leaders respond to final Budget of this Parliament
George Osborne’s last Budget before the General Election has been broadly welcomed by business leaders. Although there were no big ‘giveaways’, most received the Chancellor’s plans positively.
Pensions and investments
Stephen Depla, head of wealth management firm Brewin Dolphin, based at Marlborough Business Park, said; “We might have expected George Osborne to throw everything but the kitchen sink(s) at.
Instead, he provided us with a fully funded budget, and didn't spend the money on cheap giveaways. How very grown up of him - but he's kept plenty of wriggle room to offer some stunning manifesto pledges on Inheritance Tax.
“Cash ISAs were pointless before, but now they are pointless and unworkable. You’d need to have cash savings of more than £100,000 at one percent interest to need to shelter any of it from the taxman, while the plan to allow you to take money in and out in any tax year looks like an administrative nightmare.
“The Chancellor’s announcement on deeds of variation leaves us with uncertainty - but we'd assume that the trade-off will be the much-anticipated £1m Inheritance Tax relief offer in the Tory manifesto.
“Moving on from the Junior ISA and the New ISA, the Help to Buy-SA joins the family of increasingly complex tax shelters. However, a £15,000 deposit won't go far for first-time buyers in London and the South East. But be useful anywhere north of Watford.
“Our plea to stop tinkering with pensions - please stop before everyone stops saving – was not heeded with another reduction in the lifetime allowance to £1m. After taking 25 percent tax free cash – this pot could only buy an indexed linked joint life pension of £26,000”.
Tax and savings
Malcolm Emery, a dual-qualified chartered tax adviser and solicitor at law firm Thrings, whose local office is at The Green, said: George Osborne delivered his sixth and final budget of this Parliament, and in true pre-election style, has attempted to woo those savers and first time buyers among us.
“Tax on income from savings will be abolished for millions while a new ISA will be available for first time buyers. The scheme will help many individuals save for a property by contributing £50 to every £200 they save. With property prices in the South West being among the highest in the UK outside of London, the scheme will hopefully assist more first time buyers to get on the property ladder.
“While some prefer to go out with a bang, Mr Osborne is obviously planning for his next term of office by delivering a very measured Budget. Building on the austerity measures implemented five years ago, he declared that ‘Britain is walking tall again’. The Office for Budget Responsibility says the UK is growing and it has revised its growth forecast for 2015 upward from 2.4 percent to 2.5 percent while the country’s debt is falling as a share of GDP.
“A pre-election Budget is never a good time to make waves but some mid-market businesses may be disappointed by today’s announcement. Despite significant tax revenues being generated in this market, successive governments have failed to invigorate businesses by introducing innovative tax reforms to help boost their profitability and the economy as a whole. A large number of these businesses operate in the South West, and many will argue that the lack of tax reforms has impacted on the performance of the local economy.
“The Chancellor is trying to assist smaller companies raise finance to help their businesses grow. He has announced changes to the Enterprise Investment Scheme (EIS) and Venture Capital Trusts so that both schemes are compliant with the latest state aid rules. The EIS in particular is a very popular way for fast-growing companies, particularly those in the technology sector, to raise working capital from private equity sources.”
Edward Hall at High Street land and property agent Smiths Gore said: “The Budget was optimistic and gives a confident tone for business in the UK. The announced underlying trends in economic growth are positive and steady, which is a good platform for industry, not only in property, but across the spectrum of service, manufacturing and retail.
“With specific reference to the property market, The Help to Buy ISA stimulus we see as an encouraging move for savers, but at Smiths Gore, we do not expect that to have an influence on house prices. Even the stamp duty changes announced in December have not resulted in a boost to levels of sales. The key to increased house prices tends to be increased liquidity in the market.
“Previously, this resulted from high equity levels in property and generous mortgage lending schemes. Some financial analysts have considered that the release of Pension annuity funds might spark a ‘property rush’ in the buy-to-let field. Indeed, anecdotally, a number of potential buyers have indicated that they would prefer to see their funds in property rather than an annuity.
“The Chancellor revealed the government has plans to introduce 20 new housing zones, which could provide up to 45,000 homes on brownfield sites across the country and is targeting the building of affordable homes to meet demand. It remains to be seen if the rhetoric is translated into action with campaigners in London taking to the streets in a call for more homes to be built to address the UK's housing shortage.
“It has been suggested that 245,000 extra homes need to be built in England alone every year to deal with the growing population, but planners say only half that number are being completed.
Aside from the property-related Mr Hall, a Former Tank regiment Captain, welcomed help for veterans. “I am personally delighted that veterans and charities for regiments, which fought in Afghanistan are receiving substantial funds received from the Libor fines. I am also delighted that the government has pledged more towards a permanent memorial for those who died in Afghanistan and Iraq, as well as helping to renovate Battle of Britain memorials,” he said.
The NFU says the Chancellor’s decision to allow farmers and growers to average their incomes over five years – a key NFU election manifesto ask – will go some way to allowing them to manage market volatility – and focus more on investment and growth.
“We are very pleased that Mr Osborne said that he had listened to the NFU and will allow farmers to average their incomes over five years. As he mentioned in his speech, farmers are increasingly facing a volatile marketplace and this will enable them to manage the impacts of this,” said NFU president Meurig Raymond.
“News that the annual investment allowance will be addressed in his Autumn Statement is also welcome. As he mentions, £25,000 is not an acceptable level which would encourage on-farm investment and we will await further announcements with interest.
“The NFU also believes the changes to the ISA system will allow more flexibility in accessing funds without losing the benefits of tax relief; and that our members who supply the drinks industry will also welcome a cut in alcohol duty for cider, beer and spirits. We will also await further detail on how the changes affecting self-assessment tax forms will affect our farmers and growers, particularly given that access to reasonable broadband is an issue for many.
“While we appreciate the need to roll out ultra-fast broadband of up to 100 Mbps throughout the UK, we must not forget those rural communities who have yet to reap the benefits of a decent speed for broadband and might only get a basic legal entitlement of 5 Mbps and subsidised satellite services.
“Like most motorists in the UK, rural communities will also be pleased to see that fuel duty will not rise this year.”