How will this Summer Budget affect you?
As is appearing to become almost customary, a number of pre-Budget announcements have been made in the days leading up to the Summer Budget, not least the intended changes to tax relief on Pension Contributions, Inheritance Tax and Welfare Reform.
George Osborne had a couple of surprises lined up for the announcement on the day though, and it is these which are more likely to affect the tax bills of owner-managers, such as the changes to the way in which dividends are taxed.
Virtually all of the significant announcements do not come into effect until 6th April 2016 at the earliest, although many owner-managers may wish to consider making plans for any changes that may affect them sooner rather than later.
The team at A4G are devoted to keeping up to date with the latest economic developments and communicating the possible impact to our clients.
In order to achieve our mission statement of being the best all-round advisers to owner-managers we have sorted through the budget report to highlight the areas of importance to you and your businesses.
'A big Budget for a country with big ambitions’ said George Osborne at the start of the first Budget for a Conservative government for 19 years.
Based on figures produced by the Office for Budget Responsibility, Britain remains the fastest growing of any of the other major advanced economies. However, with plans for a Budget Surplus by 2019/20, a year later than previously announced, not all austerity measures have left the table quite yet, with cuts to both the welfare budget and some government departments as well.
Repeating himself from the March Budget, George Osborne said that living standards continue to rise strongly, and he sought to incentivise the country to train, build and invest more for the future, with announcements intended to promote both business investment and job creation.
However, there were several announcements which will affect a number of owner-managed businesses adversely, with the largest surprise being that of the changes to the taxation of dividends.
Issues Affecting Owner Managed Businesses
- Changes to the taxation of dividends
- Employer’s National Insurance Exemptions
- Purchasing Assets - Annual Investment Allowance (AIA)
- Corporation Tax Rate reduced from 2017
- National Living Wage
Other announcements and new legislation
Read in further depth about the other announcements from the 2015 Summer Budget
- Inheritance Tax relief on homes
- Restricting tax relief for Buy to Let landlords
- Additional rate taxpayers- reduced tax relief on pension contributions
- Tax-free childcare system delayed
- Help to Buy ISA’s
- Increases to the Personal Allowance and higher rate threshold
- Fuel duty, Vehicle Excise Duty and the Roads Fund
Reaction to the Chancellors Speech
‘A Budget that sets out a plan for Britain for the next 5 years to keep moving us from a low wage, high tax, high welfare economy; to the higher wage, lower tax, lower welfare country we intend to create.’
George Osborne, Chancellor of the Exchequer
‘He's making working people worse off by cutting tax credits and scrapping grants for the poorest students, and families will still suffer despite the new national living wage.’
Harriet Harman, Acting Labour Leader
‘This is a double-edged budget for business. Firms will welcome measures to balance the books and boost investment, but they will be concerned by legislating for wage increases they may not be able to deliver...’
John Cridland, Director General - Confederation of British Industry
‘Even though offset by a welcome increase in the employment allowance, some will find the new national living wage challenging. Changes to the treatment of dividends will also affect many of our members.’
John Allen, Chairman – Federation of Small Businesses
Warning:This Report was written immediately after the Chancellor delivered his Emergency Budget speech and is intended to be a general overview of the main announcements. It is based on the press releases and other documents available on 8th July 2015. Budget proposals are subject to amendment before the Finance Act receives Royal Assent. This summary is not intended as a complete summary of every measure. Every effort is made to ensure accuracy, but no liability is accepted for any action taken or refrained from in consequence of its contents. Always seek professional advice before acting.