'Britain is open for business': The impact of the July 2015 Budget - sponsored feature; Square One Law's managing partner, Alan Fletcher examines the impact of the summer budget - sponsored feature.
Byline: Angela Upex
As George Osborne delivers the first Conservative Budget in almost 20 years, the outlook is surprisingly positive for North East businesses argues Square One Law's managing partner, Alan Fletcher.
Amidst headlines of welfare cuts and a national living wage there was some good news for UK businesses, mostly surrounding tax measures to be introduced over the coming months and years.
George Osborne unexpectedly announced the gradual reduction of Corporate Tax to 19% in 2019 and then 18% in 2020. It has been suggested that this will help to offset any rising costs associated with the increase in the national minimum wage which is set to reach [pounds sterling]9 per hour by 2020. Small to medium businesses
Also beneficial to small to medium businesses, and arguably the measure to have the greatest impact on North East operations is the purportedly permanent setting of the Enhanced Annual Investment Allowances at [pounds sterling]200,000 a year. This should bring some stability to those wishing to invest in large scale projects as they can plan ahead without worrying about annual changes to the policy. The announced increase in national Insurance employment allowance for small firms, which will grow by 50% to [pounds sterling]3,000 from 2016, is to be welcomed and the freeze on fuel prices and commitment to road improvements will also significantly benefit smaller business that rely on transport links.
Owner managed businesses will however need to factor in the new tax on dividends which will apply from 6 April 2016. Although a [pounds sterling]5k tax free dividend allowance is being introduced, this will be offset by the abolition of the associated tax credit and the increase in rates of tax by 7.5% on dividends, so whether extracting profits by way of dividend together with the timing of dividend payments needs to be carefully considered on a case by case basis. Personal Finances
When it comes to managing personal finances there were a couple of important points to note. Following on from April's pension reforms there was a further review of the taxation of pensions. While no firm announcement was made, Osborne suggested a move towards taxable contributions and tax free receipts which could have a significant impact on the savings industry across the UK.
Those with buy to let mortgages will also face increased restrictions as mortgage interest relief has reduced to 20% for buy to let properties. This will be of particular...
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