Chancellor Unveils First Tory Budget Of New Parliament

Comments From Irwin Mitchell’s Business Lawyers

08.07.2015

David Shirt, Press Officer | 0161 838 3094

The Chancellor, George Osborne, delivered what was the Conservative party’s first Budget for almost 20 years today and in a statement that contained plenty of previously announced proposals and plans, there were also a number of surprises.

Here are some of the comments following the announcement from some of our business lawyers.

PLANNING AND INFRASTRUCTURE

"Chancellor George Osborne has been freed from the shackles of the coalition government to deliver his seventh Budget but the first purely Conservative Budget in twenty years. When the Chancellor announced this Budget back in May, the Chancellor said that he wanted to “turn promises made in the election into a reality”.  Indeed, he introduced this Budget as “a big Budget for a country with big ambitions.

"However, the Chancellor has decided to tease us because the proposed planning reforms are not to be announced until Friday. We would like to see clearer thinking in getting more houses built.  The greatest threat to London’s economic resilience is the weakening of housing affordability.  The only solution for this is to build more homes. Giving money to first time home buyers or simply moving housing wealth around without building any more homes just means that the price of owning a house gets pushed up.

"It is anticipated that the planning reforms will not be that radical to include, for example, development in the greenbelt, but could include, for instance, making low-cost employment land available for housing development. Meanwhile, house-building and property shares will be hit by the various measures unveiled: the move to tighten non-dom tax rules with permanent non-dom status to be abolished will hit companies with a focus in London and could impact on the level of foreign investment.

“The infrastructure proposals were very much focused on the creation of the new £15 billion road fund to improve roads for the rest of the decade, to put Transport for the North on a statutory footing and introduce a “seamless oyster-style” ticketing system in order to connect Northern England together.  The promise to put “the power into the Northern Powerhouse” was demonstrated by giving Manchester powers over the fire service, a land commission, children’s service and employment programmes (and similar devolution deals are being negotiated with Liverpool and Sheffield).  It will be interesting to see whether these measures will stimulate and support spending on critical infrastructure and provide an opportunity for other parts of England to build themselves provides a rebalance to London.  Time will tell whether these initiatives will deliver."

Martha Grekos, planning partner

 

NORTHERN POWERHOUSE

“There were some significant Northern Powerhouse announcements today including an agreement reached with the ten councils in Greater Manchester to devolve further powers to the city. The initiative needs other cities within the region to take steps towards devolution and it sounds like progress is being made in this area. It was also encouraging to hear about a new body to promote integrated transport in the north of England is to be established.”

Roy Beckett, partner and head of Business Legal Services in Manchester

 

TAX

“The Chancellor’s announcement on non-doms is a sensible approach and rather than abolishing the concept, he is generally leaving it alone and clearly identifying certain scenarios where it doesn’t make sense. Anyone who has been resident for more than 15 years will be either already paying tax on their overseas’ income or paying the non-doms charge. Only the very wealthy will pay any extra and may choose to leave UK to avoid or look closer at becoming non-resident.”

Gary Clarkson, tax specialist

 

PENSIONS

"Today's Budget gave two key announcements on pensions -  one expected and one a surprise. As predicted, the current £40,000 annual allowance for contributions to pension schemes will be significantly reduced for high earners paying 45% tax on earnings over £150k a year, tapering down to just £10,000 by the time they earn £210,000 a year. The savings will be used to fund the inheritance tax threshold increase planned for 2017.

"The surprise announcement is the Green Paper on completely restructuring the taxation of pensions to make them more akin to ISAs . Pensions currently offer tax relief on contributions into them and on investment growth, but they are taxed through income tax  when benefits are taken. The proposal to make them more like ISAs would mean removing all tax relief on contributions in, there would still be tax relief on investment growth  but no tax payable when taking benefits.

"This follows the pension freedoms which came into force in April and choice changes which allow individuals in money purchase schemes to take their benefits as lump sums, subject to tax, from the age of 55."

Nigel Bolton, pension partner

"The Chancellor is planning to change pension tax relief - this could cost pensions savers £10bn. ‎The idea seems to be to no longer give tax relief on payments into pension but give some tax relief on retirement. My view - it increases tax take now at expense of some future date when people access their pension savings. In effect it is robbing future Peter to pay today's Paul."

Martin Jenkins, partner and national head of pensions

To find out what our other experts think to the changes announced to inheritance tax, please click here