In his pre-election Budget, the Chancellor set out a positive economic background with growth forecast at 2.5% this year, inflation at 0.2%, the highest employment rate in UK history (records only run from 1971) and the national debt targeted to fall. No electioneering here then!  However, if there is a change of Government after May 7 then any major proposals won’t see the light of day.

 

One of the most eye-catching headlines, certainly from an SME’s perspective, was the intention to ‘abolish’ annual tax returns and replace them with online tax accounts. These will be populated with information held by Government (such as wages and benefits) reducing what has to be completed by the taxpayer. Other details will still need to be entered online, for example business profits and rental income. Individuals will also still need to take responsibility for what they declare as their taxable income. Using digital technology should be applauded but individuals and businesses will still need advice from accountants and tax advisers. We don’t see this as an end to the tax return but rather as a smarter way of achieving the same goal.

 

The ‘Northern Powerhouse’ received further encouragement with a new Enterprise Zone in Blackpool and extensions to those at Mersey Waters and Manchester. We were delighted to see £56,000 contributed to the refurbishment of The Muni Theatre in Colne.

 

For personal taxes the tax-free allowance is £10,600 from April. For business owners, the capital gains tax ‘entrepreneurs’ relief’ rules are tightened.  For business, there is an indication the current £500,000 limit for 100% capital allowances will not revert to £25,000 in January, but will be reviewed.

 

Encouragement for savers was also high on the agenda. From April 2015, if your total income does not exceed £15,800, your first £5,000 of bank and building society interest is tax-free. From April 2016, a personal savings allowance of £1,000 will also be available so anyone with income below £150,000 can have tax-free savings. But how many people with low income enjoy £6,000 savings income? And how many with £150,000 income will be excited at saving £200?

 

With the new Help to Buy ISA first time buyers can invest up to £200 per month and receive a matching bonus of £50 per month. Your first home cannot cost more than £250,000 outside London. The bonus is capped at £3,000, and although welcome it will take five years’ saving to achieve. This won’t provide any short-term boost to the housing market.

 

Meanwhile, pensioners will be able to sell their pension annuities giving them opportunities to ‘cash in’ similar to those who have not yet bought annuities. This comes with a serious financial health warning and professional advice should be taken.