Chancellor of the Exchequer, Jeremy Hunt, has unveiled his plans for the UK economy as part of his Spring budget.
Industry experts and financial service professionals have reacted to the various announcements he made in that Budget speech and have been sharing their thoughts with IFA Magazine as follows:
According to Nikhil Oza, Corporate Tax Director at UHY Hacker Young, one of the UK’s top 20 Accountancy networks, says that the move by the Chancellor is the biggest change to tax policy on capital investment in decades. Says Nikhil Oza: “Nobody should underestimate just how radical a step the Chancellor has taken on business investment today.”
“This policy makes the UK a world leader in encouraging businesses to invest in IT, plant and machinery.”
“It’s also a big step forward in simplifying tax for a huge swathe of businesses.”
“This move will be welcomed by businesses all over the country and will encourage them to invest in the assets that will drive their growth and perhaps help close the productivity gap.”
Amber Mace, UK&I Consumer Products & Retail Sector Leader at EY comments on the impact of Hunt’s Budget on the retail sector.
“The Chancellor’s announcement of full expensing of capital expenditure for the next three years will be welcome news for consumer products and retail businesses, with the move at least partially offsetting the corporation tax rate rise from 19% to 25% next month.
“Towns and cities that are dependent on their High Streets have been particularly affected by the squeeze on consumer spending, but details of 12 new proposed UK Investment Zones could see accelerated development, time-limited tax benefits and wider support for local growth within towns and cities across the UK. This, combined with overseas R&D costs remaining allowable for another year, should also have a positive impact for the sector. The labour market measures also appear supportive, with retail likely to welcome childcare reform in helping both current employees and others looking to return to work – although the benefit will not be felt for some time given the staged rollout.”
Mitul Pandya, managing director at accountancy firm, Charterwells: “Overall, this was a highly targeted Budget for businesses to invest in capital and to lure people back into the workforce. This will help the UK get back to growth and ease the burden of the shortages we are seeing in the labour market. For the NHS, this is positive news for senior consultants who are incentivised to carry on working for more years by the removal of the pension Lifetime Allowance.”
Petronella West, CEO ofLondon-based wealth manager, Investment Quorum: “Jeremy Hunt has eliminated the lifetime allowance cap on tax-free pension savings, and the annual tax-free allowance for pensions will rise from £40,000 to £60,000. These changes will help simplify the pension system again and actively encourage people to invest more in their future. Our clients have reacted positively to this news and have already started asking us whether they should put more money into their pensions. This is very welcome and exciting news for a large number of pension investors.”
Riz Malik, director of Southend-on-Sea-based R3 Mortgages: “Rather than devising a quantum strategy, it would be great to have a housing strategy. The Chancellor must have left part of his speech at number 11 Downing Street. Even potholes got more of a mention. The Chancellor is more concerned with filling in holes in the ground rather than building on it. I’m sure first-time buyers struggling to get on the ladder or people worried about their mortgages will take consolation in the fact we will be investing in a £900m supercomputer. The Government is handing Labour the keys to Number 10 on a plate. The saving grace is that increasing childcare provisions for every child over 9 months will potentially help with mortgage affordability.”
Samuel Gee, director at Bristol-based Manning Gee Investments: “This Budget demonstrates a clear commitment to promoting work and productivity, which are the foundation of the UK economy. The inclusion of major early years reforms offers additional support for parents with childcare costs. There is clear encouragement for non-employed individuals over 50 to return to work, and the protection of disabled individuals’ benefits while they are employed helps to place employees and enterprise at the forefront. While the 3-month extension to the energy support scheme will provide critical assistance for those living on the edge, the long-term effects of the cost of living crisis will continue to cause stress and anxiety for many consumers, undoubtedly posing a challenge for the Government for some time to come.”
Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial: “The expected disappointment for small businesses came. The unnecessary increase in corporation tax could have been offset somewhat with changes to business rates and/or national insurance, but we saw nothing from an uninspired Chancellor who has lost his grip on the business community. This was a Budget with few ideas damning the country to stagnation for years to come.”
Daniel Smith, director at London-based marketing agency, Doogheno: “The third industrial revolution is already underway, and our Government is only just waking up to it. Creating a resilient tech sector requires access to funding and skills, both of which are in short supply. We have to compete with Berlin, Amsterdam and other cities for the best talent, and events over the last week with SVB have shown just how fragile the money behind tech is. If the government is serious about creating an environment where the next unicorns can be born and thrive they will need to put tech at the heart of the economy. And tech’s impact on the economy cannot be understated. AI is coming for our jobs. AI will replace middle-income, middle-class jobs – the lawyer, the accountant, the marketer. And the impact of that on the economy can’t be understated.”
Jenny Blyth, owner of London-based Storm In A Teacup Gifts: “Despite Mr Hunt proudly declaring new incentives and celebrating these supposed ‘wins’, the self-employed micro businesses remain stranded. Stuck between heat or eat, we are once again forced to sit on our hands and wait for our turn. Where is the help for the single woman, working from home with anxiety and chronic illness? Where is my break, my investment, my win? I work 60+ hours a week so why am I being punished?”
Philip Dragoumis, owner of London-based wealth manager, Thera Wealth Management: “In terms of the pension reform announced in the Budget, both the increase of the annual allowance to £60,000 from £40,000 and the abolition of the lifetime allowance will ensure more people are incentivised to remain in work and save for their pensions and will not have any tax disincentives to stop working. The pension rules are also getting simpler, which is another real positive. There has been no change to the tapered annual allowance so the very high earners will still not be able to contribute, but everybody else will benefit. Overall, this was a very impressive Budget. Also, the fact that the OBR inflation forecast of 2.9% for 2023 is much lower than before is good news for interest rates and government bonds.”
Luke Thompson of King’s Lynn-based PAB Wealth Management: “The Chancellor has really pulled the rabbit out of the hat with the removal of the lifetime allowance for pensions. The general consensus was that this was going to be significantly increased but by removing it completely and increasing the annual allowance to £60,000 he will help a lot of high earners reduce their tax bills. In recent years, we have seen a great many customers get caught by the Lifetime Allowance and for them the logical thing to do has been to retire early. By increasing the allowance, the Chancellor has given a real reason for high earners to continue to work until their state retirement age.”
Keith Budden, MD at Hampshire-based IT security firm, Ensurety: “In the week that has seen the release of ChatGPT 4, the UK Government is right to provide funding for AI research. Many of us probably watched some sci-fi movies in the past featuring AI and thought “that will never happen in my lifetime”. Well it’s time to wake up: it has. But, and it’s a big but, ChatGPT and other AI tools remain just tools, and they still require human input. Will they replace your job? Probably not, but could they take a lot of the boring/non-efficient tasks away? Most definitely yes. An AI engine these days can reply to a job vacancy on Indeed (or other employment job board) and craft a reply with sufficient plus points that the candidate gets through to interview, with probably no more than 60 seconds of applicant input.”
Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com: “The childcare reforms will help massively to get people back into work after maternity leave. This in turn will make it easier to buy a property so that’s very welcome. What’s not so welcome is the ominous silence on house building. Probably because they know house builders won’t build anywhere near the number of property needed whilst house prices are falling. Nothing on social housing either, which is what’s desperately needed to supplement the private rented sector.”
Joshua Gerstler, chartered financial planner at Borehamwood-based The Orchard Practice: “This is great news for those who want to invest for their retirement. The Lifetime Allowance penalised those who had invested diligently and sensibly during their working life and discouraged people from putting money into pensions. This removes that barrier. In addition, the increase in the Annual Allowance will encourage people to put more away for their retirement. Pensions are one of the most tax efficient ways to invest, and these policy changes make them even more so. Well done.”