Understanding the complexities of the Chancellor of the Exchequer’s annual March Budget can be challenging.
But if you think you’ve got to grips with how the 2015 Budget affects you and your business, you’ll soon need to do it all over again, following Chancellor George Osborne’s announcement that there will be a second Budget on 8 July.
Days after the Conservatives’ general election victory on 7 May, Mr Osborne used an article in the Sun newspaper to announce: “I am going to take the unusual step of having a second Budget…because I don’t want to wait to turn the promises we made in the election into a reality.”
He promised that it would be “a Budget for working people” with “a laser-like focus on making our economy more productive”.
Issues that could feature in the Budget include the future level of the Annual Investment Allowance (AIA).
The AIA was increased in the 2014 Budget to £500,000 until the end of 2015. It enables the cost of investment in plant, machinery and integral features – such as lifts and heating, air conditioning, electrical and water systems – to be deducted from taxable profits, up to the AIA threshold.
The £500,000 allowance followed an increase from £25,000 to £250,000 for a two-year period starting on 1 January 2013.
In his March 2015 Budget, Chancellor Osborne said that the Autumn Statement – usually in December – would be a better time to address future levels of the AIA. However, the Summer Budget may provide an opportunity to confirm the future level of the AIA, something that business and other groups have been calling for.
The institute of Chartered Accountants in England and Wales, of which Moore Thompson is a member, said: “It is now time to confirm a long term rate of the Annual Investment Allowance (AIA). Reaffirming the rate at £500,000 will provide stability and consistency to firms that like to plan and invest for the long term, and would kick-start the kind of investment needed to enable businesses to thrive.”
As with the March Budget, we will issue a special report on the summer Budget, within hours of Mr Osborne concluding his speech, which will highlight all the key tax and other announcements.
If you would like further information on any aspects of the summer Budget, please contact us.