Taj's blog is slightly later than normal this month following on from The Chancellor George Osbornes Budget announcement.
Taj covers off all of the key points that the Chancellor announced and the positive impacts that these could have. Including the Lifetime ISA being introduced next year, Capital Gains Tax and a headline reduction, an increase in tax free personal allowance and investment in infrastructure.
As always, Taj will be back next month.
Hello and welcome to my special budget blog. George Osborne has just stopped talking and we've now seen what new bombshells he's going to have in store for contractors, and the reality is it’s a bit of an anti-climax on the whole, more positive than previous budgets which is great. I’m going to have a look at the impact on contractors very very shortly but before that let's have a look at the wider things that affect everybody, and then specifically what could affect contractors.
So point number on: The widely anticipated increase in the tax allowances for income tax, both for the basic rate and for the middle rate, it's going to be up at 45,000 by 2017 which is good news but not a massive surprise.
The big highlights will be taxes on sugar, all those of you who like sugary drinks then you’re going to be hit in the pocket for those. There has been freezes on fuel duty, always going to be a winner for everybody and also a freeze on alcohol duty, on things like beer and cider and indeed those of you who like a drop of whiskey. So all very popular policies there, which don’t cost the chancellor a lot, so all very safe.
The key thing that's going to grab the headlines is going to be an extension of the help to buy ISA which has now been extended to some kind of pension replacement scheme. The ISA limit has first been increased up to £20,000 per year. The government has also said we now have a lifetime ISA, so
those of you with the help to buy ISA can actually roll that into the new lifetime ISA. Those of you young enough under 40 can now contribute up to four thousand pounds into one of these and the government will put in a one-thousand-pound contribution, very popular indeed if you are buying your first home or indeed to keep your retirement income. The chancellors main theme was to try to support the next generation and this is his flagship policy with this budget.
As far as contractors are concerned, there were some positives let's have a look at those first of all none of them are really earth shaking in their content, corporation tax the lower rate will drop from 20 percent to 17 percent by 2020, every little helps of course. There's been a bit of a relief on the oil and gas sector, which will obviously effect some of you that work up there in the North Sea oil fields. There’s going to be a halving of the levee that is currently put on oil and gas producers from 20% down to 10%, hopefully it will mean that certain contracts are safer than they were. Oil prices have reacted instantly to that and have gone up given their recent hammering.
We’ve had announcements to cut capital gains tax from 28% to 20% for the higher rates, and 18% to 10% which can be useful for some of you, unfortunately it’s not going to be extended to properties that are being disposed of, maybe a bit of a double edged sword there.
The main positives as I see them are investments in infrastructure to the north of the country, the HS3 link by railway between Manchester and Leeds has been given the green light. There is big investments in the roads in the north, particular M62 between Lancashire and Yorkshire, and indeed
flood defences all over the country particularly in the North. These will all lead to more work for those of you working in the engineering field who are contractors and indeed the supply chain that that sort of project would support.
So these are the positives. Things to watch out for, where there wasn't a lot of detail right now, personal service companies, for all of you who work in the public sector who do use personal
service companies, to mitigate expenses etc. That sort of thing is now going to be closed and the
Chancellor's main strand, I guess, in order to generate revenue by the end of this Parliament is going after tax avoidance measures and an aggressive tax avoidance schemes the details of which we don’t yet know but HMRC I’m sure will be communicating those in the coming months.
Those are the highlights, we will see over the coming days and weeks where that unfolds in terms of policy but hopefully you haven’t been too badly damaged by that and you can probably see a few quick wins. I’ll be back next month to talk in a bit more detail about the impact. Thanks for watching.