Private clients could be forgiven for breathing a small sigh of relief after the Budget as the Chancellor was silent on any changes to Inheritance Tax. Those with larger business interests however will have some serious planning to do following the reduction to the lifetime limit for Entrepreneurs' Relief potentially costing some owners up to £900,000. There was some welcome news for pensions and some changes to SDLT but on the whole no great surprises.
Even though there was not much in the Budget specific to professional practices, partners in professional firms will particularly be impacted by a reduction in Entrepreneurs' Relief and changes to the pensions annual allowance.
The big fiscal headline is the restriction of Entrepreneurs' Relief lifetime allowance from £10 million to £1 million. For the companies themselves the announcements mostly confirmed what we already expected with the rate of corporation tax remaining at 19%. Innovation and invention were key themes: there will be changes to R&D including increasing the R&D Expenditure Credit rate from 12% to 13%; a consultation on qualifying costs possibly to include data and cloud computing; and a delay to introducing PAYE caps for the SME payable tax credit. For companies, the tax focus continues to be on process and compliance.
The pensions industry were expecting some big announcements in this Budget. While not the changes some would have hoped for, the Chancellor has opened the door on addressing some of the issues put forward by the pensions industry, which is encouraging.
Although spending on public services has increased, it was a disappointing Budget for the charity sector. Little will be of direct benefit to meet the sector’s challenges. Nevertheless, the removal of VAT on e-publications will be a saving for some, along with some additional measures which will benefit others.