Big Budget Bonanza
Well the new chancellor certainly came out all guns blazing, with promises of increased spending and tax cuts; it’s a far cry from some of the austerity measures that we have seen in recent years. So, what’s the good stuff that’s going to have an impact on us and our clients?
The big headlines that we need to be aware of for clients in the ‘classic financial planning’ sense are certainly more beneficial for the wealthy. We’ve seen a jump in JISA limits from £4398 to £9000, and the increase in the pension contribution annual allowance to £200,000 before taper relief starts to apply; great news for a certain category of client!
How about you, the adviser? As a business owner, and bearing in mind your business-owning clients, what wins can you take from the budget? Well on a sombre note to start, with the current coronavirus cloud that hangs over us, the Chancellor has expected that the worst-case scenario would be 20% of the working population off sick from work at any one time. This potentially has huge implications for small businesses, as many advisory firms are. The government have pledged to cover up to 14 days worth of sick pay and apply this from day 1 instead of the usual day 4 for businesses with 250 employees or less (although we are awaiting confirmation as to exactly when this commences). There is also various emergency funding and tax breaks being temporarily introduced to help counteract the effect it will surely have on certain industries, including abolishing business rates altogether this year for retailers.
On a longer-term, and cheerier note, there are some fantastic benefits that have been made available for SME’s to enable business growth. A rise in the NIC threshold will make it slightly cheaper to employ your workforce, and extra funding and tax breaks will be made available for entrepreneurs in the form of start-up loans, research and development funding, and loans for businesses wanting to export. It’s a reassuringly positive step in post-Brexit Britain that we have plenty of encouragement for UK businesses to grow and start, thus helping increase the level of wealth in the UK. Great news for advisers across the board, especially those working in the corporate pensions and protection space!
The flip side being, a lot of the funding to help with this business development is coming from the change to entrepreneur’s relief, with the lifetime limit being dramatically reduced from £10m to £1m meaning a substantial increase in CGT liabilities for those selling their business. EIS anyone?!