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Richard Mathews of Banks

Budget 2014 – the business world reacts

Swindon and Wiltshire businesses, and the organisations that represent them, have broadly welcomed the contents of George Osborne’s 2014 Budget, presented to the House of Commons on Wednesday.

Good for savers, but not much for business: that’s the the verdict on the Chancellor’s Budget from Swindon chartered accountants Banks.

Director Richard Mathews said the measures to help businesses were pitched at larger enterprises.

“The Chancellor announced that the annual investment allowance will rise to £500,000 until 2015, but how many small businesses have half-a-million to invest?” he said.

“Other measures were very industry specific, such as cutting the bingo tax from 20 per cent to 10 percent, and the energy bill tax breaks for manufacturing.

“One good piece of news for all businesses was the cancellation of this September’s planned fuel duty rise.”
The Chancellor’s measure to help pensioners and savers were an interesting move, Richard said.

These included a new pensioner bond, merging ISAs and increasing the annual investment allowance, and changing pension rules such as those governing drawdown limits, as well as the creation of a free right to advice service.

“We’ll have to have a look at the detail as it emerges, but this could change the face of pensions in the future.”

Malcolm Emery of ThringsMalcolm Emery, a partner at Thrings and a dual-qualified chartered tax adviser and solicitor was surprised to see no cut to VAT.

“The Chancellor indicated this year’s Budget was one for building a resilient economy, and with the recovery gaining momentum but not yet secure, he had an opportunity to provide further stimulus by reducing the standard rate of VAT. It is therefore surprising he did not take this opportunity, particularly given this was a pre-election Budget.

“While the ongoing commitment to reduce the rate of corporation tax is to be welcomed, the number of individuals caught in the 40 per cent tax bracket has increased by 25 per cent since 2010.

“This puts more pressure on individuals who operate as sole traders or via partnerships, and many people will argue Mr Osborne could have done more to minimise the tax burden on small and medium-sized businesses.

“Meanwhile, the pension reforms and the introduction of a single new ISA with its annual tax-free savings limit of £15,000 are a welcome surprise, and stand to offer business owners the opportunity to plan for the future in a tax efficient way.”

Mike Harling of Whitefield InternationalMike Harling of Whitefield International, a Marlborough-based international business consultancy providing foreign direct investment, corporate location and international trade services to UK businesses, said: “This was an accomplished budget given the Chancellor’s limited room for manoeuvre.

“As exports are so vital to achieving a sustained economic recovery, the most positive news was the doubling of funding for the export finance scheme, whilst at the same time cutting interest rates on this by a third.

“The Chancellor also gave his nod of approval to the country’s entrepreneurs by retaining the SEED Enterprise Investment Scheme, which is crucial to maintaining the flow of funding to early stage SMEs, allowing them to grow and develop.

“There were benefits too for larger companies, in particular both the doubling of the investment tax break and the decision to cut energy costs for manufacturers stood out as well targeted initiatives.”

Myles Palmer of Brewin DolphinMyles Palmer of Marlborough-based wealth management company Brewin Dolphin welcomed the news that retirees would no longer be forced to buy an annuity with their pension fund, calling it ‘a total game changer’.

He said: “The budget has unleashed a raft of measures that will be hugely welcomed by savers.

“Like a phoenix from the flames, George Osborne’s policy sees the British pension rise from its deathbed, freed from fears over stealth taxes and over complication.

“This is a total game changer, and will result in the almost immediate death of the annuity – for which we have long called for.

“It is a huge change in the flexibility of the pension system, with lower taxes and higher lump sums. We welcome the fact that the government is willing to trust people with their own finances and await clarification on how the vast amount of necessary advice will be delivered.

“The Chancellor has removed the nanny knows best aspect of the ISA – allowing a far broader range of products, and the ability to switch from shares to cash and back again.

“With a massive increase in the amount that can be sheltered in an ISA wrapper, as well as the inclusion of peer to peer lending and shorter dated retail bonds, the ISA is now a far sharper tool in the tax planning toolkit.

“In line with our expectations the Chancellor announced the carbon price floor will be frozen at the 2015/16 level of £18.08/t until the end of decade.

“This is clearly good news for energy consumers and energy intensive industries as it will mean electricity prices will be lower than would have otherwise been the case until the end of the decade.

“It also improves the UK competitiveness compared to the rest of Europe, as the carbon floor tax simply increased the cost of carbon emissions in the UK over and above the EU carbon tax.”

Julie Fellows of Chesterton HumbertsJulie Fellows, associate director of Marlborough- and Chippenham-based Chesterton Humberts said: As expected with a general election a little more than a year away, the Chancellor delivered a fairly benign Budget aimed at pleasing as many voters as possible.

“The main good news items for the housing market are the extension of the
equity loan element of Help to Buy by another four years, and confirmation of more support for the housebuilding sector in terms of funding and planning reform.

“Creating a £500m Builders Finance Fund for smaller-scale developers is expected to
deliver 15,000 new homes, and providing £150m of Right to Buy finance for people to build their own homes could result in 10,000 new homes.

“However, some investors will be affected by the lowering of the threshold for the
15 percent Stamp Duty levied on the acquisition of residential properties via non-natural persons from £2m to £500,000 from March 20 this year.”

John Longworth of the British Chambers of CommerceBritish Chambers of Commerce said Budget 2014 had “passed the business test.”

Director general John Longworth said: ““Business wanted a Budget that was disciplined, focused, and geared towards the creation of wealth and jobs – and that’s what the Chancellor has delivered.

“With a huge confidence gap still separating employers from young job-seekers, we are very pleased to see the Chancellor heed our call to help firms take on and train tomorrow’s workforce.

“Overcoming that confidence gap means more investment in young people, more apprenticeships, and more jobs, which are critical with more than 900,000 16-to-24-year-olds still out of work.

“Osborne’s focus on investment, exports, house-building and economic resilience passes the business test. By making a better business environment his top priority, the Chancellor has recognised that successful and confident companies are the key to transforming Britain’s growing economic recovery into one that is felt in homes and on high streets.

“As with any Budget, there were some populist measures that were not at the top of business’s wish list. Luckily, these were far outweighed by considered measures to support business growth and wealth creation.

“Many of these measures are excellent for now, and for the future. Yet the nurturing of a truly great economy requires more action than one Budget can deliver.

“At the upcoming General Election, Britain’s entire political class must commit to a long-term programme that delivers better infrastructure, a stronger skills base, access to finance for growing companies, even more export support and a clear, consistent tax environment.

“Otherwise some of the Chancellor’s welcome moves might not have the desired effect in years to come.”

Both the Federation of Small Businesses and the Forum of Private Business were happy to see action on exporting and the cost of energy.

John Allan of the Federation of Small BusinessesFSB national chairman John Allan said: “”This was always going to be a ‘steady-as-you-go’ Budget for business, designed to get the UK’s financial affairs in order.

“The Chancellor delivered a Budget to maintain positive momentum in the economy, while incorporating fiscal prudence.

“Today’s Budget offered a clear signal for businesses to grow through the increased investment allowance, and with a focus on manufacturing.

“The £7 billion package to cut manufacturing energy bills will help create jobs and strengthen this key sector. 

“That said, all small businesses need to be bold and brave in 2014. Following today’s fall in unemployment, we know more than half of our members have aspirations to grow with many wanting to recruit and pay more too.

“The Chancellor set the pace towards some progress but there is still more to be done to get the economy and public finances back on track.”

Phil Orford of the Forum of Private BusinessesFPB Chief executive Phil Orford said: “The headlines for business today are on energy policies and export.

“There are sizeable gains for UK manufacturers here in particular over the next few years.

“On export the Chancellor has thrown his weight behind getting more businesses exporting.

“Our membership is confident about growth but much of that growth is UK based so we needed to see such a commitment, though we will continue to work with the Treasury and others to develop even healthier export subsidies for business.

“Overall this was a budget that offers some help to all levels of business, with perhaps a slight focus on the mid-size energy intensive and manufacturing businesses, rather than the very small ones.

“However, it does help to tackle the cost of energy and makes good on the commitment trailed before the Budget to support those that look to invest, either in the UK – with a more extensive Annual Investment Allowance – or abroad, with a £3bn export support budget.”