Budget 2015

The chancellor's emergency budget, the Conservatives' first without a coalition partner, included a reduction in corporation tax and an increase in minimum wage which will bring it in line with the living wage.

Gavin Taylor, technical director, Mayes Accountants

Tax on dividends – There’s no easy way to put this but if you receive dividends your tax bills will be going up from next April. That said I’ve checked the numbers and the strategy of low salary and dividends is still better for tax than paying a higher salary.

Interest relief on property rental income – If you pay tax on profits on rental income from property the rate of tax relief you get for loan interest is being restricted from April 2017

Corporation tax rates – These are decreasing from 20 per cent to 19 per cent in 2017 and then to 18 per cent in 2020.

Colin Tice, tax partner, Cassons

Taxes on dividends (beyond an initial £5,000 allowance) increase by 7.5 per cent. Whether an entrepreneur decides to take a dividend from his company in preference to a salary may well now be a more complex question. Quite how this fits in with the promised “tax lock” undertaking not to increase income tax (or national insurance or VAT) is difficult to comprehend until you see that the cap is to apply to tax on earnings and savings, and dividends are technically neither.

Higher earners are discouraged from pension saving by further reducing the cap on contributions once income is £110,000. It is perhaps with some justification that investors will wonder what precisely the Government’s pension strategy is.

Ensuring continued investment, particularly amongst manufacturing and agriculture sectors, is crucial to helping firms get on and grow and confirmation that the Annual Investment Allowance (AIA) be set to £200,000, rather than reverting to £25,000, which would have been simply unsustainable, is a major step in the right direction.

Following the uncertainty of the Scottish Referendum, General Election and now the UK’s forthcoming membership of the European Union, there was a risk that businesses would hit the pause button on spending. The chancellor has ensured this won’t happen, with the new rate of the Annual Investment Allowance (AIA) being set at £200,000 as well as reducing Corporation Tax to 18 per cent in 2020.

However, it was incredibly disappointing that no further announcements were made regarding investments in our regional transport infrastructure. While the introduction of an Oyster card system across the North is a nice gesture in principal, it will do absolutely nothing to alleviate the lack of capacity and very little to improve the connectivity on our region’s ever-crumbling rail network.

First and foremost, the government has a legally binding target to reduce the UK’s carbon emissions by 80 per cent by 2050 and our existing homes account for 27 per cent of our current emissions. Simple logic suggests that if they do not address 27 per cent of the issue, that target will not be met. Without tackling the energy inefficiency of our housing stock, the government is not taking cutting carbon emissions seriously. This is rather surprising when you consider that not long ago; the prime minister wanted his Conservative-led coalition to be the “greenest government ever.”

Jane Parry, lead tax partner, PM+MThe chancellor has put a lock on income tax, NIC and VAT rates for the length of this parliament, which sounds great in terms of creating certainty for tax payers. But it is important to note that the lock only applies to the rates. It doesn’t cover the thresholds at which various rates apply or the exemptions applying to those taxes. Accordingly, there is still plenty of scope for the chancellor to tinker with those taxes. He also has full freedom to amend capital gains tax, inheritance tax, corporation tax and stamp taxes rates if he chooses.

In terms of the details, there won’t be a £500,000 nil rate band; instead each individual will keep their £325,000 nil rate band and from April 2017 will have a separate “family home allowance” on top of that of £175,000. There will be restrictions on how it can be used – basically to ensure it is only available against the value of family homes passed down the family. We will be paying close attention to the details of the new legislation as they emerge to see how they will affect people who downsize or who perhaps have chosen to keep their home but release equity from it.

Businesses were left with mixed messages. The promise of cuts in corporation tax rate from 2017/18 was tempered by large business being the biggest funder of the chancellors' budget through the requirement to pay taxes three months earlier. This measure alone gave the chancellor almost £4.5bn in 2017-18 and echoes the change that Gordon Brown introduced in his first Budget, back in 1997.

The CBI supports a higher skilled, higher wage economy, but legislating for a living wage does not reflect businesses’ ability to pay. This is taking a big gamble that the labour market can absorb year-on-year increases of an average of 6 per cent.