A financial expert from one of the leading accountancy firms in North Wales believes small and medium-sized firms across the region will be major beneficiaries from the Budget.
Anthony Lewis, a director of Chartered Accountants, Coxeys, which has offices in Wrexham and Saltney, said Chancellor George Osborne’s decision to boost the National Insurance allowance meant companies would generate a tangible cash boost.
Although the Chancellor’s proposals have yet to be fully scrutinised, Mr Lewis said: “There’s a fair bit that is good for business, especially for small businesses with employees who will benefit from the 50% increase to £3,000 in National Insurance allowance.
“That’s a very big benefit which is worth an additional £1,000 in the back pocket. This allowance reduces the cost of employing staff considerably” said Mr Lewis.
The Chancellor’s decision to revisit annual investment allowance could also encourage growth in the economy and provide more jobs, according to Mr Lewis, who added: “Another boost for business is confirmation of the annual investment allowance for buying plant and machinery.
“Currently the limit is £500,000, but it was originally meant to be dropping to £25,000 in December. The Chancellor has now announced that it will be set at £200,000 on an ongoing basis”.
Not so fortunate, however, are owner managed companies which will see dividend tax credits replaced by a new tax-free allowance of £5,000 on dividend income. Thereafter, rates of dividend tax will be set at 7.5%, 32.5% and 38.1%.
“The people who won’t benefit from the Budget changes are those for whom a large part of their remuneration strategy has been to have dividends,” added Mr Lewis.
“It’s been a big tax advantage for a number of years but the Chancellor has now changed how the dividends are taxed.
“Owner managed companies can limit the National Insurance they pay, so have always been able to save up to 11%, but suddenly the Chancellor is clawing a lot of that back. He’s been threatening to do that for a long time but have been reviewing the available methods of achieving this. It was previously a big tax advantage but the system is now being made fairer.”
The Chancellor has also announced changes in the housing market by saying that mortgage interest relief for buy-to-let homebuyers will be restricted to the basic rate of income tax.
“Higher rate individuals in the buy-to-let market have been hit” said Mr Lewis.
“There haven’t been too many changes announced in personal tax, apart from the increase in allowances. The higher rate threshold has gone up, although not to much more than it is now, and his stated aim to raise that to £50,000 by 2020 will be more or less covered by inflation over the same period.
“Changes have been announced to inheritance tax allowances, which will significantly reduce inheritance tax due on family homes.
“However, as always the devil will be in the detail which has not yet been fully scrutinised over the coming days.
“But for most businesses it’s a very good Budget.”