Better Budget?James Pinchbeck digests the 2014 Budget and the impact it has on Lincolnshire.
By James PinchbeckMarketing Partner, Streets Chartered Accountants
Given the continued rhetoric from government that there are still difficult decisions to take, and despite continued signs of improvements in our national economy, austerity measures are still two words very much in the fray.
Perhaps more cynically too, is that it is not this year’s Budget but the pre-election 2015 Budget that will create more headline grabbing news and interest. You may then feel it is not worth reading on or trying to find out how the Budget affects you.
However, such an approach does come with a severe financial health warning. The danger is, given the fact that the Budget is not the only time changes are announced, the advent of the Pre Budget or the current administration Autumn Statement invariably includes changes to come either in the next and or future tax years. Therein lies the pitfall of blissfully thinking that the changes announced, will have no overall impact on you, and that Budgets both for the UK plc and individuals are fiscally neutral.
Over a period of time, you may find that the impact of tax legislation on you or your business has changed significantly and that you are neither up to speed nor applying tax treatments correctly, or worse not taking advantage of those that are currently in place.
Whilst more time is needed to really digest the detail in the Budget 2014, there does seem to be a number of welcome announcements for both business and individuals alike.
In terms of individuals…
All those that pay income tax will no doubt welcome the proposed increase in the starting point at which it is paid to £10,500 next year, along with the previously announced increase to £10,000 this year. For working parents, the proposed introduction of financial support for childcare into 2015, will be most welcome.
Those looking to buy their first home can hopefully benefit from the extension to the Help to Buy equity schemes which will now run until 2020.
Savers too (though we are not deemed to be a nation of savers), are set to benefit from the proposed changes to ISA, Individual Savings Accounts, which offer tax free benefits whereby the annual investment allowance is being increased to £15,000 along with the flexibility to spread investment and move investments between cash and shares/stocks. Savers will also be able to benefit from the increase in the annual savings allowance in premium bonds from £30,000 to £40,000 and the abolition of the 10% rate of tax on savings income. This is along with proposed beneficial changes to the tax treatment of pensions draw down and the need to buy an annuity.
Now turning to business…
The headline grabber was probably the announcement to increase the Annual Investment Allowance from £250,000 to £500,000. Whilst the higher figure may be something they could only dream about, an increase in the limit as opposed to any decrease must help support any key business investment decisions. This is vital if businesses are to share in the growth in the economy that we are experiencing nationally. There could be a danger that businesses who don’t start to adopt a growth strategy may find that in real terms their market share is declining.
Given the importance placed on manufacturing and overseas trade in both balancing our books and as a driver for economic prosperity, the announcement of the significant increase in export finance of £3bn from government must be good news. Those looking to develop overseas business will also benefit from a lower rate of air duty on long haul flights. Equally supportive was the announcements around the increase in R&D tax reliefs and SEIS.
No doubt and not least, many small businesses will welcome the one off £2,000 cash allowance available through employers National Insurance Contributions. Retailers too will benefit from a £1,000 reduction in business rates.
Was it all rosy?
No, and not least for tax professionals and accountants advising their clients.
Whilst tax evasion has always been unacceptable, the Treasury over recent years has sought to close tax schemes which seek to reduce a personal and corporate tax liability. Avoidance however is not frowned upon as much as evasion. The underlying trend is that you will have to pay the tax which is due and seek to reduce any such liability by consultation with the Revenue afterwards. This and the proposed announcement to increase Revenue power and resources means that the ability not to pay what is due is to become a rare occurrence.
The fear from the tax profession is that clients will believe that there is nothing they can do, however experience shows that increasingly simple, effective, and acceptable tax planning is being overlooked.
Locally, Lincoln Cathedral can hopefully receive some financial support from the announcement that Britain’s crumbling cathedrals are to get an extra £20million for repairs. The money will be used for renovations ahead of the centenary of the First World War later this year. George Osborne wants cathedrals to act as a ‘focal point’ for local and national commemorations, after the Church of England warned of an £87million shortfall in funding for repairs.
And with the 800th anniversary in 2015, Lincoln’s one of only four remaining Magna Cartas will benefit from the proposed money to support its commemoration.
Perhaps then whilst the Budget was billed not to have a ‘wow factor’, it does with its individual elements impact on all of us. For businesses and individuals alike, the danger will be to fail to really assess its impact and how best we can take the advantages and disadvantages it presents. Certainly as we approach the end of the last and the start of the next financial year, it must be a good time to take stock and seek professional advice.
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James Pinchbeck is Marketing Partner at Streets Chartered Accountants, a top 40 UK accountancy practice. James, as a specialist in marketing professional services, is responsible for the development and implementation of the firm's strategic marketing as well as its engagement in the community it which it works and serves. His role allows him to capitalise on his broad interest in the national and local economy as well as his passion for enterprise. As part of his wider interest in enterprise, marketing and education, James is a board member of NBV – the East Midlands Enterprise Agency, an FE College Governor and a board member of the University of Lincoln’s Business School. He is also an Institute of Director’s past Branch Chairman.
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City of Lincoln Council has approved a 1.9% tax hike despite a series of cuts for 2021-22 due to the financial uncertainty around the COVID-19 pandemic.
The 1.9% rise will take city council’s share of council tax for a Band D property in Lincoln to £285.39 – an increase of £5.31.
The executive committee agreed on increasing allotment charges, council house and garage rents.
Council bosses predict a budget gap of £1.75 million and said it must close the hole for financial stability.
Allotment charges will also see most tenants pay between £58.70-£78.30 per year from 2022, an increase of between 38p and 51 pence per week.
Council housing rent will increase by an average of 1.5%, while council garage rents will increase by 3%.
Attendees at City of Lincoln Council’s executive on Monday.
The authority said it faces a number of ongoing challenges caused by the coronavirus pandemic and requires a substantial reduction in all of its budgets.
Cllr Ric Metcalfe, Leader of City of Lincoln Council said: “It’sareasonablymodestincreaseformostpeople,andwewill support lowincomegroups stillwiththeconcessions.”
The council has saved more than £9 million annually over the past decade, however will have to increase savings by £850,000 next year, rising to £1.75 million by 2023/24.
Due to the pandemic’s impact on government funded reliefs, empty properties and business closures, the authority estimates it will only retain £5.1 million of the £42 million of business rates generated in the city.
The draft budget will go to consultation and return before the council later this year for a final decision.
There have been 372 new coronavirus cases and nine COVID-related deaths in Greater Lincolnshire on Monday.
The government’s COVID-19 dashboard recorded 325 new cases in Lincolnshire, 30 in North Lincolnshire and 17 in North East Lincolnshire.
Some nine deaths were registered in Lincolnshire and none in North and North East Lincolnshire. These figures include deaths both in and out of hospitals, as well as residents in hospitals outside the county.
NHS England reported nine new local hospital deaths at United Lincolnshire Hospitals Trust and one at Northern Lincolnshire and Goole NHS Foundation Trust on Monday. Hospital deaths have now surpassed 1,000 since the pandemic started in Greater Lincolnshire.
National cases increased by 37,535 to 3,433,494, while deaths rose by 599 to 89,860.
Leader of South Holland District Council, Cllr Lord Gary Porter, put the spike down to outbreaks in two care facilities, one being a children’s care home.
A group of urban explorers who travelled from three different counties to look around derelict buildings were caught and fined in Grantham for breaching lockdown rules. Two groups of revellers in the woods near Woodhall Spa have also been fined.
In national news, Public Health England have confirmed 4,062,501 people have received a first dose of a COVID-19 vaccine.
Those in England aged 70 and over, as well as the clinically extremely vulnerable, will begin receiving offers of a coronavirus vaccine this week.
Ten hospital trusts across England consistently reported having no spare adult critical care beds in the most recent figures available.
It comes as hospital waiting times, coronavirus admissions and patients requiring intensive care are rising.
All UK travel corridors, which allow arrivals from some countries to avoid having to quarantine, have now closed until at least February 15.
Travellers arriving in the UK, whether by boat, train or plane, also have to show proof of a negative coronavirus test to be allowed entry.
Supermarkets face increased inspections from local councils to ensure they are COVID-secure amid a push from the government to clamp down further on coronavirus transmission.
Local governments have been asked by ministers to target the largest supermarkets for inspection to ensure companies are enforcing mask wearing, social distancing and limits on shopper numbers.
Here’s Greater Lincolnshire’s infection rate up to January 17 according to the government dashboard:
Greater Lincolnshire’s infection rates from Jan 11 to Jan 17. | Data: Gov UK / Table: James Mayer for The Lincolnite
Coronavirus data for Greater Lincolnshire on Monday, January 18
Greater Lincolnshire includes Lincolnshire and the unitary authorities of North and North East (Northern) Lincolnshire.
44,374 cases (up 372)
30,784 in Lincolnshire (up 325)
6,927 in North Lincolnshire (up 30)
6,663 in North East Lincolnshire (up 17)
1,686 deaths (up nine)
1,196 from Lincolnshire (up nine)
268 from North Lincolnshire (no change)
222 from North East Lincolnshire (no change)
of which 1,006 hospital deaths (up 10)
612 at United Lincolnshire Hospitals Trust (up nine)
30 at Lincolnshire Community Health Service hospitals (no change)
1 at Lincolnshire Partnership Foundation Trust (no change)
363 in Northern Lincolnshire (NLAG) (up one)
3,433,494 UK cases, 89,860 deaths
DATA SOURCE — FIGURES CORRECT AT THE TIME OF the latest update. postcode data includes deaths not in healthcare facilities or in hospitals outside authority boundaries.
Eight people were fined for two separate COVID-19 rule breaches over the weekend, after being found partying and camping near Woodhall Spa.
Officers were called to two different incidents at Ostler’s Plantation, a woodland area near Woodhall Spa on Saturday, January 16 and on Sunday, January 17.
Five people were issued with £200 fines after a report of partying at around 11.08pm on Saturday.
The next morning, police were again called to the area at 8.21am after people were seen camping at the location.
Three people were fined as a result of this, again valued at £200 due to being first time offenders.
If these fines are paid within 14 days of the offence, the cost will be cut in half to £100.
On the same weekend, but this time in a different location, six urban explorers were fined after travelling from three different counties to try and gain access to an abandoned hospital in Grantham.
The behaviour of COVID-19 rule breakers has been described as “dangerous” by Lincolnshire Police’s assistant chief constable Kerrin Wilson, who referred to them as “Covidiots”.