Massive boost for farmers as Investment Allowances doubled in Chancellor’s Budget

Doubling Annual investment Allowances will provide a massive boost to UK farms, says to Sean McCann, personal finance specialist at leading rural insurer NFU Mutual.

“The Chancellor’s Budget surprise announcement that Annual Investment Allowances for businesses would be doubled to £500,000 until the end of 2015 is great news for farmers and the rural economy. It should encourage new investment in farm machinery and plant boosting farm incomes and helping create jobs in the rural economy.

“To help farmers make long-term plans for business development we urge the Chancellor to make this increase permanent in the next Budget.

“There was also good news in the Budget for country people in flood-prone areas that an extra £140m is being put aside for flood protection measures.

“Rural dwellers also heaved a sigh of relief that planned increases in fuel duty were scrapped – and £200m given to local authorities to repair the thousands of potholes which are currently making driving hazardous on country roads.

“There was even a hint of good news for farmers producing crops for whisky beer and cider production – frozen or reduced duty rates could boost consumption and hence farm gate prices.”

Sean hailed the Chancellor’s statement as a watershed moment for people saving into pensions and ISAs.

“George Osborne has freed pensions and ISAs from the shackles of many rules and regulations. It’s those restrictions that have put all too many people off saving into a pension before now.

“With this new freedom, more people should feel greater confidence in how they can access their retirement savings in the future. It should boost savings, investments and help to encourage many more people to save for their retirement.

“Some of the changes will come into almost immediate effect. From next week, people aged 55 and over, and with pension pots worth up to £30,000 will be able to take it all as a lump sum rather than buying an annuity.

“From next year, annuities will no longer be the standard option. Instead, the Chancellor has proposed a raft of changes to ensure people taking their pension can choose to access their pension pot almost as they wish. There will be some tax applied but this will be in line with income tax rates rather than the current 55% rate of tax.

“These changes will create some uncertainty for people looking to take their pension within the next 12 months. We expect to be advising more people on their retirement options over the coming weeks and months.

“Many people will still want to use their retirement savings to buy a guaranteed income, so annuities will still have a very valuable part to play in many people’s retirements.

“NFU Mutual was not alone in calling for the Chancellor to liberate the ISA system. ‘ISA independence day’ will be celebrated by savers and investors on 1st July as the restrictions on how much can be saved in cash ISAs and transferred between stocks and shares to cash will be lifted. The dramatic increase to £15,000 in the total amount that can be saved or invested in each tax year is very welcome too.

“The increase in the Personal Allowance to £10,500 from next year is another boost to the take-home pay of many people. It will mean more money in most people’s pockets but changes to the 20% tax band means that the 40% tax band will start at £42,285 next year, that’s still lower than when George Osborne started his Chancellorship in 2010.

“The Chancellor has stunned everyone with monumental changes to the pension system. Trusting people investing in pensions with more freedom and choice will breathe new life into the system. The reasons many people have chosen to forgo the generous tax breaks and not save into a pension have been swept away in this Budget.

“The only people who look set to lose out are tax evaders. The taxman’s increased budget for reclaiming unpaid tax will make HMRC’s reach longer and its teeth sharper than before.”

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