Experimental feature

Listen to this article

00:00
00:00
Experimental feature
or

Leading industry figures give their views on this year’s Budget:

Tim Breedon, chairman of the ABI, said:

“Today’s Budget has taken important steps to boost long-term investment and secure a competitive UK tax regime. These are very important drivers for growth and we fully support them.

We strongly welcome the two per cent reduction in corporation tax which will give the UK the lowest corporation tax rate in the G7. This is a real statement of intent that shows the UK is open for business.

The industry has championed the Green Investment Bank because we believe it will stimulate economic growth , and as an industry, we are uniquely placed to support it as we invest for decades, rather than years, on behalf of our customers. We would have liked the Bank to have had access to money markets from day one rather than 2015, but we understand the reasons for a delay and welcome the additional funding.

Progress on the taxation of foreign profits will bring the UK in line with international competitors. This change will benefit corporate Britain and make the UK a better place to invest, in turn benefitting investors and pension funds. This progress is also crucial for insurers as they align their businesses for massive regulatory change over the next 18 months ahead of the Solvency II regime going live in January 2013.

We welcome the Chancellor’s promise to implement in full Lord Young’s health and safety recommendations. His review identified how badly interpreted or misunderstood regulation, bureaucracy and claims management firms have contributed to a compensation culture which is bad for customers.

It is crucial for our customers that there is a crack down on irresponsible claims management firms, who help fuel public belief that behind every accident there should be a claim, adding costs to the legal system, that are ultimately borne by all insurance customers. It is very important that the compensation culture is brought under control and the cost insurance is kept affordable.”

Robert Sinclair, director of the Association of Mortgage Intermediaries, said:

“The introduction of a Firstbuy scheme jointly funded by house-builders allowing those with a 5% deposit to own their first home will help builders clear stock, but has risks for the purchaser in a still fragile market with big regional variations in house prices. After 5 years, when interest payments commence, we hope that the market will have improved, so avoiding another group of mortgage or property prisoners. This could do little for the wider housing market and could be used as a cheap loan subsidy by those who would have bought anyway. It is, however, a strong support for the building industry.

“The proposals to simplify the rules around Real Estate Investment Trusts will assist the opportunities to develop the private rented sector. This has to be looked at in conjunction with the news that stamp duty will be altered for the bulk purchase of property. Investors will now pay tax based on the mean average of properties purchased rather than the total purchase price. This will provide a significant boost to the sector by encouraging more professional landlords and larger institutional investors to build up their portfolios, delivering the supply of much-needed homes for rent.

“Given the continuing unemployment trends, the extension by a further year of temporary changes to the Support for Mortgage Interest scheme is most welcome alongside the continuing lender forbearance programmes.”

Rebecca O’Keeffe, Head of Investment at Interactive Investor (www.iii.co.uk), said:

“There were few surprises in the budget today, which was just as well given that most recent budgets have been full of rather nasty shocks. The increasing focus on anti-avoidance measures means that, for most people, standard tax-efficient vehicles will become even more important. With no let up in the harsh tax environment, savers and investors should be looking at all tax-efficient options available to them.

“One of these core vehicles, Enterprise Investment Schemes, received good news in terms of increased tax relief, from 20% to 30%, and a significant increase in the annual allowance. This, in combination with the significantly increased qualifying company limits, means that EIS investing is likely to attract a much wider audience than previously. However, for both EIS and VCT investors, the news that HMRC will be focusing on both groups to ensure that they are targeting genuine risk capital investments means that some of the more risk-averse vehicles are likely to be placed firmly under the spotlight.”

Andrew Strange, director of policy, Association of Independent Financial Advisers

“The potential integration of the operation of income tax and national insurance contributions is interesting. However, it is important that the consultation recognises the societal importance of saving by individuals and considers the implications for not only pensioners and investment proceeds, but also for pension tax relief. An extension to the mass-market of the disconnect between pension tax relief and headline levels of tax could further an uncomfortable precedent and inadvertently send the wrong message to potential savers.

“There are two other major changes to the pension system. Firstly, the State Pension age is due to be automatically linked with improved longevity, so we should all expect to see the State Pension age rise higher than the proposed age 68 in the future as we all continue to live for longer.

“Secondly, we welcome the plan for a £140 a week flat-rate state pension. We want to see a shift to a simpler and fairer state pension system where people have a clearer view of what the state will provide and when. This in turn should engender clarity around people’s ability to retire earlier or with enhanced pension income, and should encourage responsibility and engagement with employer or personal pension schemes that may be available.”

Richard Saunders, chief executive, Investment Management Association

“What I like most about this Budget is the steady progress towards a better long-term savings framework. The Finance Bill is ending compulsory annuitisation at age 75. And the aim of introducing a simple flat rate basic retirement income is confirmed. With final salary pension schemes more and more a thing of the past, Governments have had to get to grips with a new world. The first key reform was the “A Day” simplification in 2006 which lowered barriers to entry and improved competition in personal pensions.

Auto-enrolment and NEST are now on their way, and their impact over the coming years will be profound. Experience overseas shows that such schemes massively raise awareness of, and interest in, long term saving. The current level of contributions for auto-enrolment is just a start; I suspect they will increase over time.

Ending compulsory annuitisation removes a planning blight that has long dogged a more innovative approach to post-retirement income. And taking means-testing out of the equation is the final piece of the jigsaw that will make the incentives to save much clearer.

Later this week NEST will be going public with its investment strategy. Taken with these reforms, a serious policy framework seems to be emerging from the mist.”

Tony Vine-Lott Director General TISA

“From TISA’s perspective the two key areas are Pensions and ISAs. The Chancellor is quite right that simplification of our complex state pensions system is essential. His confirmation of a move towards a new single tier pension at a flat rate and currently worth around £140 per week is therefore good news and the sooner this is implemented the better. However I would like to see further details about the level of contributions that this will be based on as this could imply a continuation of a means-tested benefits regime, which would be undesirable.

Life expectancy is increasing and the confirmation that the state retirement age will rise to 66 in 2020 was expected. There are grounds for optimism that the new automatic mechanism to increase the state pension age will be effective. But there is a need to accelerate the speed of travel towards a higher state retirement age if we are to adequately fund the UK’s pensions system.

The decision that all children aged under 18 who do not have a Child Trust Fund will be eligible for the new Junior ISA - to be launched in the autumn - is extremely encouraging, as is the commitment to identify how children in care can be supported through Junior ISAs.”

Mark Florman, chief executive of BVCA

“The BVCA has already declared this to be the Year of Venture so this Budget - with its emphasis on a private sector-led recovery founded upon enterprise and innovation - was particularly welcome.

The reforms to the Enterprise Investment Scheme and Venture Capital Trusts will have a significant impact on the fortunes of SMEs across the country. By raising the EIS income tax relief to 30%, doubling the annual investment level for individuals and quadrupling the limit for companies, the Government has sent out a clear signal that Britain is the European home of enterprise.

The doubling of Entrepreneurs’ Relief is another positive step on the road to recovery, one which will encourage greater aspiration for growth and ensure investors are rewarded for backing those high-growth and successful businesses that are so important to the future of the economy.

We were also very pleased to hear that the regulatory burden on start-up companies will be eased by making many of them exempt from new domestic regulation for three years. By freeing them from red tape, such businesses can focus their efforts on building world-class companies based on cutting-edge technology.

Combined with the additional cut in corporation tax, the Chancellor has shown that Britain truly is open for business. It is only by encouraging investment into entrepreneurs and SMEs that we can grow more companies and create more jobs.”

Copyright The Financial Times Limited 2017. All rights reserved.
myFT

Follow the topics mentioned in this article

Comments have not been enabled for this article.