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Great Financial Ideas Newsletter - March 2014

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Dear [FIRSTNAME]

A budget for business and for savers, at least that’s what the chancellor would have us believe, but did it provide the common sense approach I was asking for in last week’s blog (What can we expect from the Chancellor in next week’s budget?)?

As predicted the Chancellor has made the Seed Enterprise Investment Scheme permanent. I’ve been a fan of this scheme since it was introduced in April 2012. It enables start-up companies to get access to finance whilst also providing generous tax relief for the investors themselves. With tax relief of 50% on the amount invested and CGT exemption on eligible shares it is well worth looking at if you are seeking tax efficient ways to invest.

The doubling of the annual investment allowance from £250,000 to £500,000, until December 2015 is good news for business owners who have been holding back on new investments. It is estimated that 99.8% of capital expenditure will qualify for 100% relief.

The rate for research and development (R&D) tax credit will rise to 14.5% from 11%, providing more support for SMEs that often make losses in their early years.

The Chancellor claimed a number of measures to help companies export and be more competitive in global markets and certainly anything that reduces the costs for businesses has to be welcomed. The support for manufacturers, with carbon price floor being capped as part of a £7bn package, will certainly be welcomed by engineering companies and other manufacturers here in the Midlands.

I was interested too to hear the continued focus on getting more homes built in the UK. As some had predicted help to buy was extended to 2020 and the Chancellor also talked about half a billion pounds worth of support for small house building firms. I’d be interested to see the details of that, and see how our owner managed construction company clients might benefit.

The creation of the Alan Turing institute for research into Big Data will no doubt be of interest to my colleagues working in Information Security Management.
There were some other moves towards making finance more readily available to business owners but nothing that convinced me that the average SME will really find it so much easier to finance expansion.

The moves the chancellor made to increase the annual ISA limit to £15,000 was an interesting one, especially as people will also be able to move their money from cash to stocks and shares and visa verse. The increase in the tax free limit is great, giving a couple an opportunity to shelter up to £30,000 of savings from tax.

The surprise move in the Budget was the significant change to pensions. Heralded as the most far reaching change in pensions for 90 years, the Chancellor announced that from 2015, pensioners will be able to take as much or as little from their pension as they want, removing the need to buy an annuity. Criticism of the annuity market seems to have got through but a major issue as far as I can see will be making sure people get the right advice. It will be interesting to see how the proposed free impartial advice on how individuals can get the most from their pension will really pan out.

Perhaps this move really will make pension saving much more attractive, as individuals feel they will have more control over their own money. Of course in reality this move will also raise significant amounts of money for the Government as those choosing to take money from their pension will be taxed at the marginal rate of tax.

Some commentators are talking about this being a budget set to release money and see it spent in the economy. We’ll see, but given the freezing of duty on cider and Scotch whisky and the cut in beer duty I’ll just say ‘cheers’ and let’s wait and see how it all shakes out.

Andy Parker
Chartered Accountant Solihull


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Regards

Andy Parker
Parker Chartered Accountants + Financial Advisors

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