No white rabbit, but some pleasant surprises from George in this year’s Budget. Overall, we do feel it should prove a good Budget for growth and investment for our business clients.
In particular, the announcements will give encouragement tor business to accelerate their plans to grow exports and increase investment. The Chancellor outlined a range of supportive measures, such as enhanced export finance, an increase in the R&D tax credit for loss-making small businesses, a doubling of the Annual Investment Allowance and policies to cut energy costs.
Doubling the Annual Investment Allowance (AIA) is going to ensure a larger proportion of our clients’ capital expenditure attracts 100% relief in the year of purchase. The limits have been increased from £250,000 to £500,000 per year, until 31 December 2015. It has been estimated that 99.8% of businesses will receive 100% up-front relief on their qualifying investment in plant and machinery.
There was further positive news about the growth of the economy - the revision upwards from 2.4% (originally 1.8%) to 2.7%, is the biggest upwards change for 30 years. The Budget deficit has reduced from 11% when the coalition came to power, to 6.6%, with a forecast of a small surplus by 2018/19. These positive indicators should help boost business and consumer confidence which will further stimulate the economy. Hopefully, now we should start to hear more positive economic stories in the news.
The most fundamental change came with the announcement on pensions. The flexibility on pension drawdowns is to be radically overhauled, removing the punitive 55% income tax charge and reducing it to the individual’s marginal income tax rate.
This change will no doubt encourage savers to feel more positive about investing in pensions. More control of funds and drawings removes the fear that many clients have voiced over their life long savings being wiped out on death. It also removes the dependency on the insurance companies. With pension auto enrolment around the corner for many of our clients, the timing is welcome.
And finally, for the beleaguered motorists it was good to hear confirmation of the freeze on fuel duty and a war against potholes. Northamptonshire was given special mention in this respect. So we look forward to further work on the A14!