Businesses
Today’s Budget will both help and hinder distressed businesses in the UK, says Brian Green, advisory partner at KPMG.
"The decision to raise the personal tax allowance next April to £9,205 and move towards £10,000 in the future is generally welcome and will provide consumers with a little more disposable income to spend on goods and services."
"However, whilst this is helpful in the long-term, it is too little too late for those retailers already in distress, some of which may see March’s quarterly rent payments push them into complete failure."
"The decision not to further defer the planned increase to fuel duty will serve to add to many businesses’ pain and will make their ongoing battle to reduce running costs even more difficult. By not postponing this rise the chancellor has missed the opportunity to provide embattled businesses with a little relief."
Technology
Today’s Budget provided support for the UK technology sector and for university research and development. Chancellor George Osborne stated that he intends to maintain the UK’s position as Europe's technology centre with patent tax cuts, aid for digital media and £100m more funding for university research. He also announced £20bn in subsidised loans for small to medium enterprises.
Although the Government claimed that the overall aim of the Budget was to increase tax revenues from the wealthiest, tax relief for EIS and VCT funds was not affected.
"Today’s Budget is great news for investors looking to reduce their overall tax burden while taking advantage of the Government’s publicly funded R&D budget," said Moray Wright, Parkwalk Advisors’ director of fund management.
"Our UK Technology EIS funds invest in companies spun out of UK universities, with deep-value embedded IP and innovations, at various stages of their development. This is one of the few areas where the Government is still supporting tax reliefs, diverting funding into this area to help Britain get back on an even economic keel."
Pensions
"The Government is right to consider how the state pension age needs to increase in line with longevity. It is simply not sustainable for the state to adequately support us for the increasing number of years we are spending in retirement," said Baroness Greengross, chief executive of the International Longevity Centre.
"However, the average retirement age remains below the state pension age. Therefore, increasing the state pension age without increasing support to enable people to work longer could result in a growth in poverty in later life."
Jonathan Lipkin, the IMA’s head of research and pensions, agrees.
"The pension system needs to be simple, predictable and fair. We therefore welcome the commitment to introduce a single state pension."
"As we move towards automatic enrolment, this will help to provide a clear foundation for complementary workplace provision. However, to make this really work requires further steps."
Inheritance tax
"It is likely that the stamp duty charges outlined in today’s Budget – which are 15 per cent on properties over £2m bought via a company – will hit the high-end London property market as well as costing wealthy investors more," warned David Kilshaw, tax partner at KPMG.
"Most overseas nationals bought their UK property via a company, not to save the relatively modest stamp duty, but to avoid inheritance tax. Whereas stamp duty would be £1m on a £20m home, that paled into insignificance when compared with the 40 per cent inheritance charge, which would be £8m on death."
"Now a company is not as attractive – the stamp charge rises three-fold to over £3m. There will also be an annual levy of up to £140,000."
"This changes the dynamics: overseas nationals may now decide to buy elsewhere where they are not exposed to death duties. Life insurance to cover the inheritance tax exposure will, however, become more popular – a minor boom for the insurance industry."
He added: "Inheritance tax will now stalk the streets of Chelsea. This could change the whole dynamic of the London property scene. Overseas investors may now think twice before they buy in London. For overseas nationals, this is a mansion tax with a capital M."
VCTs
The Association of Investment Companies (AIC) welcomed the removal of the £1m limit on investment by a VCT in a single company, which comes into effect from April 2012, and the proposed rules to increase the range of companies eligible for VCT investment.
Ian Sayers, director general of the AIC, said: "The proposed rule changes allow VCTs to invest in a wider range of companies, which is a welcome boost to the sector and businesses desperately seeking finance."
"The move will ensure more efficient support to smaller businesses in the UK. Due to the withdrawal of banks from small business lending, there is an increase in the range of companies which are unable to secure development capital from traditional sources. VCTs are able to help address this issue, stimulating enterprise."