Impact on North East from 2015 Budget
With George Osborne giving his final budget of the current parliament all eyes were on him to see what crucial, potential vote winning changes were announced before the general election. Louis Fell, of George F White, was pleased to see farming getting in the spot light.
Mr Osborne got under way by welcoming slightly better than expected growth figures, with the suggestion that the 2015 forecast will see the economy grow by 2.5%. Adding that “Today, I can confirm: in the last year we have grown faster than any other major advanced economy in the world”. With the state of the economy played up, it’s time to get down to the issues that will affect people and businesses directly, especially those in the rural areas of the North East.
The real big bonus for farming businesses is that incomes can now be averaged across five years for tax purposes, rather than the two years. The announcement comes off the back of farming suffering badly from volatile markets over the past few years. Louis Fell welcomed this as “being a huge benefit to farm businesses as it will help with better cashflow management. With commodity prices fluctuating considerably, averaging income over two years wasn’t sufficient enough to aid the cashflow as required”.
Following the theme of tax it was also mentioned that there will be a review of Inheritance Tax (IHT) through “deeds of variation”, as the government plans to clamp down on tax avoidance. Restrictions have also been placed on Entrepreneurs Relief, which come into effect from the 18th March. Louis adds the “better tax planning will be required for the future”.
With the ever increasing move towards the digital age, Mr Osborne announced that Annual Tax Returns are to be abolished and replaced by “digital tax accounts”. Businesses and individuals will need to submit accounts throughout the year via computer. Meaning tax can be paid throughout the year and in instalments.
It will have also been a delight to hear that fuel duty has been frozen, with September’s planned increase being scrapped. It was further announced that the minimum wage is set to increase by 20p/hour, which will please employees. Mr Fell mentioned that “businesses will need to be aware that they aren’t under estimating costs for labour in the future. Although not part of this year’s budget, businesses will also need to factor in increased labour costs through auto-enrolment”.
For those first time buyers a new “Help to Buy” scheme will allow them to save up to £200 a month towards their first home and the government will boost the savings by a further 25%, up to £3,000.
As always everyone will enjoy the fact that beer duty has been reduced by 1p.
As with all budgets the detail will continue to arise, however if you have any concerns please contact George F White.