George Osborne gave us a Music Hall turn, with jokes and many of his favourite catchphrases, including that we are “all in this together”.
This was a Budget, he said, for “makers, savers and doers” (not to forget the bingo players!). It was also one that probably drove the final nail in the coffin for aggressive tax avoidance
The most significant and least expected announcement was changes around pensions with the relaxation of drawdown limitations and caps; and a reduction of the 55 per cent rate on excess amounts taken as a lump sum from the pension pot to 20 per cent for most pensioners. These changes will see greater options open to those approaching retirement and will reinforce the need to plan in advance. The Chancellor confirmed that free, impartial, face-to-face advice will be provided to anyone retiring – it will be interesting to see how IFAs are impacted.
Along with this, measures were introduced for savers providing greater flexibility on ISA’s, abolition of the 10 per cent starting tax rate for savings income and increasing this band to £5,000 – in reality a little used band and an easy win for George.
The usual adjustments were made to the personal allowance and basic rate bands, the previously announced increase to £10,000 was confirmed along with a further increase to £10,500 from April 2015 in the personal allowance and respective increases to £41,485 and £42,285 in the basic rate band.
An interesting and somewhat controversial announcement related to the 15 per cent stamp duty for unlet enveloped dwellings, which will now include properties bought for just £500k. This was coupled with introducing a new annual tax on enveloped dwelling band for properties from £1m from 2015 and £500,000 a year later. It is difficult to imagine that many payments will actually fall due under these ATED and stamp duty and land tax changes, presumably just greater reporting requirements where companies make use of ATED exemptions..
Greater support and lower interest rates were unveiled for exporters, George Osborne hopes to see “Made in Britain” marks more frequently around the globe.
There are plans to assist property development with planning simplifications, extensions to the Government’s much loved Help To Buy scheme, a new Right to Build scheme and new developments due in the South East.
Plans for tackling targeted tax avoidance will go ahead with the requirement to pay upfront tax due from any disputed scheme. In the past, some may have pursued even a lost cause because subsequent repayment requirements from HMRC often came with advantageous interest rates. No Longer.
It was a Budget with some flash, a few surprises but general caution, and it starts to play some of the Government’s pre-general election cards.
Simon Linley is private client partner at accountancy firm Reeves
