What does the July Budget mean for business owners?

Chancellor George Osborne has presented what he called his “big Budget”, declaring “Britain needs a pay rise”.

Mr Osborne’s first all-Conservative Budget since the General Election included plans to cut corporation tax but introduce a new national living wage for workers over 25 years old, increasing minimum pay to £7.20 an hour next year, rising to £9 an hour by 2020.
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Here are the key points for business owners from the Chancellor’s emergency July Budget:

• Corporation tax rates will be reduced from 20% to 19% in the financial year 2017, and 18% in 2020.

• The annual investment allowance of £500,000 will be reduced to £200,000 from 1 January 2016. The corporation tax relief that companies can obtain for the cost of goodwill will be restricted on all deals with effect on or after 8 July.

• The NIC employment allowance of £2,000 will rise to £3,000 from April 2016. Companies where the director is sole employee will no longer be able to claim this allowance.
• Insurance premium tax will increase from 6% to 9.5% from 1 November 2015.

• There will be an extra inheritance tax nil rate band for residences passed on death to descendants, starting at £100,000 in 2017-18 and rising to £175,000 in 2020-21. It will be transferable to surviving spouses and will apply to equivalent amounts where an individual has down-sized on or after 8 July. The extra nil rate band will be tapered by £1 for every £2 of net estate over £2 million. The nil rate band generally will be frozen at £325,000 until 2021.

• Dividend tax credit will be abolished from April 2016 and there will be a new dividend tax allowance of £5,000 a year. The new rates of tax on dividends will be 7.5% for basic rate tax payers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

• Non-UK domiciled individuals who have been resident in UK for at least 15 of the last 20 years will be treated as UK domiciled for tax, including inheritance tax from April 2017.

• The government will consult on radical reform of the system of tax relief for pensions. The introduction of the secondary market in pension annuities has been postponed until 2017.
• The Chancellor said he was “open to further radical change”, suggesting pensions could be “treated like an Isa”.

• Those earning more than £150,000 will have their tax-free contributions allowance cut from the current £40,000 per year to a minimum of £10,000.

• Tax-free personal allowance to be raised from £10,600 to £11,000 next year, with a future target of £12,500.

• Threshold for 40p tax rate raised from £42,385 in this tax year to £43,000 in 2016-17, with a future target of £50,000.

• New cars will need an MOT when they are four years old, not three as now.

• Fuel duty frozen for another year.

• Vehicle Excise Duty is being reformed. New cars will pay a variable rate but beyond the first year drivers will pay £140 in tax on most cars. Zero carbon emission cars are exempt.

Clifton honoured at industry awards ceremony

Bristol-based Clifton Asset Management was honoured at a prestigious industry award ceremony for the hugely-successful launch of the alternativebusinessfunding.co.uk (ABF) portal.
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The finance company was highly commended for Innovation in the SME Finance Sector at the Business Moneyfacts Awards in London on March 19.
The accolade was the latest in a successful month after CAM was named as one of the UK’s top disruptive SMEs in The Everline Future 50 Awards and also reached the finals of the Credit Today Awards – shortlisted for the Best Alternative Funding Provider Award.
CAM chairman Adam Tavener was highly instrumental in the launch of the ABF portal in March 2014.
Customers are signposted to the most appropriate source of non-bank funding by an interactive, user-friendly traffic light system.
With over 14,000 visits so far and 8,000 clicks through to a funder, an estimated 2,500 SMEs have successfully found funding through the portal since launch.
Chancellor George Osborne has announced that legislation is set to be introduced later this year to force banks to refer SMEs turned down for funding to alternative funding providers following lobbying by ABF.
ABF is widely recognised as a front runner to receive Treasury recognition.

Adam said:

[blockquote]“Although Clifton drove the development of the ABF portal, this accolade also recognises the other six founding funders, without whom this would not have been possible.
The portal has really gathered momentum since launch – finding funding solutions for around 2,500 businesses in just twelve months. This is testament to the speed and simplicity with which business owners can get an indication of the funding options open to them.”[/blockquote]

Budget 2015: Clifton Asset Management turns spotlight on George Osborne’s vision

George Osborne declared “Britain is walking tall again” as he delivered his final Budget before the General Election.
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But what economic path has the Chancellor set us on before the nation goes to the polls in a few weeks?
One of Mr Osborne’s headline announcements was to cut the pension lifetime allowance from £1.25 million to £1 million.
“Is the Government encouraging us to save for the future elsewhere?” asks Emma Hall from Clifton Wealth.
[blockquote]“Will the Government bring in another form of Fixed Protection for 2015/16/17 for clients who maybe close to the £1.25 million by that time?”[/blockquote]

Clifton Asset Management Group Financial Planning Director Anthony Carty attacked the move.

[blockquote]“In my opinion this is a retrograde step further disenfranchising company executives and business owners in terms of building their pension wealth. This is at a time when the very same audience needs to be engaged with pensions for their employees due to auto enrolment.”[/blockquote]

[blockquote]“I would have thought it would be more sensible to dispense with the lifetime allowance altogether and simply reduce the annual contribution limit or restrict the level of tax relief on those contributions.”[/blockquote]

The move to cut the allowance, which will be indexed from 2018 and save around £600 million a year, came as the Chancellor revealed reforms to ISAs, giving people the opportunity to take money out and pay it back in again.
By making ISAs more flexible, is the Government making them more attractive in an attempt to encourage us to use them instead of pensions? It would certainly save them a lot in terms of tax relief.
Another well-trumpeted announcement was allowing five million British pensioners to get their hands on their pension pots.
By giving them the ability to sell their annuity income to a third party the money paid can either be taken as a lump sum or put into a drawdown contract for investment.
In both scenarios the tax will be at the individual’s marginal income tax rate.
Emma said this was “great flexibility” for clients but begs the question how would the Government regulate this and how would the underwriting be done on the individual who owned the annuity?
The Chancellor also tackled the problems of first-time buyers trying to get onto the housing market with Save to Buy ISAs.
First-time buyers will get a £50 top-up from the Government for every £200 invested in a Save to Buy ISA.
Will this encourage growth in the property market again? The Government relief is up to a maximum of £3,000 and can only be used to buy properties worth up to £250,000 or £450,000 in London.
The cash incentive from the Government will also only be paid when the purchase goes ahead and therefore no interest can be earned on the £3,000.
[blockquote]“This is heavily dependent on people’s earnings and the banks’ ability to lend. The Budget reports that employment rates are rising but earnings growth has slowed,”[/blockquote]

Budget 2015: Competition in SME lending is still on Government’s wish list

SME lending may have slipped under the radar as the spotlight was focused on the headline-grabbing announcements in Chancellor George Osborne’s Budget.
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But promoting competition in SME lending is still very much on the Government’s wish list.

The Budget statement revealed that the British Business Bank will be asking for a show of hands from credit reference agencies and finance platforms who could potentially help those turned away by the banks.
The annual rush to file a tax return is coming to an end.

Proposals to scrap the annual tax return and replace it with a new digital process to collect tax and National Insurance contributions was a good reform, especially for the self-employed, said Emma Hall from Clifton Wealth.
But she does have a word of warning.
[blockquote]”If mistakes are made due to the new process, will the client be penalised?”[/blockquote]
Mr Osborne also announced a Government review into attempts to avoid Inheritance Tax using deeds of variation.

With no movement in the IHT band planned until at least 2018, this could be a significant change which will affect succession planning for our clients,” Emma said.
The Government is planning a new personal savings allowance to remove tax on up to £1,000 of savings income for basic rate taxpayers and up to £500 for higher rate taxpayers from April 2016.

Additional rate taxpayers will not receive an allowance.

Great news

The announcement from George Osborne that legislation will be introduced so that banks match SMEs that have been rejected for loans with alternative finance providers, comes as no surprise to us, but is hugely welcome nonetheless.

From the outset, the principle behind our collaboration with other alternative funders was to provide a simple and safe journey for businesses to access quality alternative funding if they were not able to, or did not wish to, obtain finance from a main bank.

Our alternative business funding portal has been an outstanding success already, with thousands of businesses having already passed through the site to an appropriate funder. But, it was always designed to exist in an environment where banks and other significant credit providers were required absolutely to signpost rejected SME owners to the now vibrant alternative funding sector.

The confirmation from The Treasury that our initiative will, indeed, pass into legislation is both sensible and pragmatic.

What we are seeing is the first steps of a journey which will, ultimately and permanently, change the way small business owners access finance for growth going forward.

This is a very positive move for the economy and Clifton are proud to have played such a significant part in this and look forward to continuing our close work with The Treasury to ensure that what is finally delivered is simple, fair, transparent, but most of all gets real results.

In his statement George Osborne said: “Today I can announce that as part of the first ever Small Business Bill going through parliament, this government will legislate to require the big UK banks to pass on information on small businesses they reject for loans, so that FinTech companies and alternative lenders can step in and offer finance instead.

“So often a small business will be suitable for finance, but 70% only approach one bank and nearly 40% give up at the first attempt. Meaning many businesses just don’t get the finance they need.”

Great news indeed!