Motorists in the city and across the county, who rely on their cars for work and social life, were no doubt pleased to hear that the freeze on fuel duty remains in place and our local authorities will put to good use the pledge of funding to repair our roads and fix the pot holes.
Retailers in market towns and the city of Lincoln will also welcome the proposed introduction of business rate relief, along with initiatives to look at the future of the high street – the emphasis being on a more mixed economy including residential space, retail, leisure and workspace.
For our primary and secondary schools the news of any funding for capital related projects must have come as good news as they return from half term holidays. However, prioritising need may be a challenge, given the budgetary constraints faced by those charged with the financial management of our educational settings.
The announced increase in spend for the provision of health care, and especially that relating to the provision of mental health care for young and old alike, must be good news to those concerned with such care.
Hopefully our local Air Ambulance, which has recently set out to provide 24 hour cover, will be able to receive some much needed funding from the £10 million pledged nationally for such provision.
With a growing trend towards self-employment, be it from University Graduates or those switching employment for self employment, it was good to see continued support for the provision of Start-up loans and the New Enterprise Allowance.
Many businesses across Lincolnshire are looking at the challenges and opportunities for a post Brexit Britain. This includes looking at improving competitiveness, achieving supply chain efficiencies along with mechanisation, use of artificial intelligence, digital processes and robotics. Undoubtedly such initiatives often come at significant cost, therefore hopefully the announcement that the tax-free annual investment allowance will increase from £200,000 to £1 million will give those seeking to invest the necessary confidence and incentive to do so.
Across a county where salaries, especially for the young, have not kept up with house prices and therefore getting on the housing ladder is often not possible, it was good to hear the plan to extend the help to buy scheme until 2023, along with news that stamp duty has been abolished for all first-time buyers on shared-ownership homes up to £500,000.
A bit of light relief was the announcement that there is to be new mandatory business rates relief for the provision of local authority toilets.
It may come as somewhat of a surprise but there is actually a shortage in the provision of such facilities.
The not so good news and what else could he have done for us?
Whilst it is not untypical to hear of workforce skills shortages and productivity issues, it was a shame that more was not done to support both those seeking vocational training along with providers of the same.
Whilst the announcement to reduce the contribution required for taking on an apprentice by small businesses from 10% to 5% it is still invariably difficult for our county’s many such business to be able to take advantage of the apprentice programme.
With a lack of awareness, time and resource often preventing them from taking the first steps or making the commitment to take an apprentice on.
Greater Lincolnshire can proudly boast about its growing number of technology and innovative businesses whether they are engaged in software, the digital arena, engineering or advanced manufacturing. Often in contrast to our more urban counterparts or those in established science parks or universities, innovation and R&D in the county is undertaken by small enterprises.
Whilst they may have benefited from tax reliefs for R&D, proposed changes to such incentives may reduce the support that can be received.
We are also not likely to be able to capitalise on the £1.6bn announced for R&D into Advanced Technologies.
Comments from Streets’ Partners
Luke Prout, Tax Partner on the Future High Streets Fund:
“After wide speculation, the Chancellor announced a number of measures to help small businesses that operate on the UK’s high streets.
“From April 2019, businesses that operate from premises with a rateable value below £51,000 will benefit from a business rates reduction of one third. A £675 million Future High Streets Fund was also announced to strengthen community assets and improve our nations high streets.
“There have been too many shops on our high streets that are closing or are continuing to struggle, compared with large out of town shopping centres and online retailers. Whilst this is welcome, this will not be enough, as rents are far too high and it is the larger employers that are suffering with the wider issue of the loss of retail jobs which makes the sector volatile for employee stability.
“There will also be consultation over the treatment of holiday lets defining which properties will qualify for wither Business Rates or Council Tax to ensure that genuine holidays lettings business qualify for business rates reliefs as intended.”
Property & Construction:
“There is a new allowance for the construction or refurbishment of buildings called Structures and Buildings Allowances (‘SBA’s). The new allowance will be available to the construction of or refurbishment of commercial buildings allowing businesses to deduct 2% per annum against the cost. The new allowance will not be available for residential property, but it will include care homes and hotels.
“The new allowance will not qualify as expenditure for the Annual Investment Allowance and it will operate in conjunction with Plant and Machinery for fixtures and Integral Features. The new allowance will be available for contracts entered into on or after October 2019. It was also announced that from April 2019, the special rate pool allowance will reduce from 8% to 6% per annum.”
Annual Investment Allowance:
“The Chancellor also announced a two year temporary increase in the Annual Investment Allowance (AIA) from £200,000 to £1 million per annum with effect from 1 January 2019. The AIA enables businesses to claim a tax deduction for the entire purchase cost of qualifying assets in the year of acquisition.
“There has been a large gap in the capital allowances system since Industrial Buildings Allowances (‘IBA’s) were abolished in 2011. Many large projects relied on this allowance to assist in delivering large capital projects. Whilst similar in natures to IBA’s, SBA’s goes a few steps further as it applies to all commercial buildings whereas IBA’s did not. This is a welcome change and should incentivise capital building projects.”
“There were further announcements in the 2018 with some changes to Entrepreneurs Relief. It was widely anticipated that Entrepreneurs Relief was due to be reformed, but instead two changes were announced to restrict the relief in certain situations.
“The qualifying holding period of an interest in a business, assets, or shares increases from 12 to 24 Months. This will be from 06 April 2019, but where business cease to trade before 29th October 2018, Entrepreneurs Relief will still continue to be available after April 2019 for up to 3 years providing the 12 month test has been met.
“Changes the current requirements on share capital and voting rights for shares disposed on or after 29 October 2018. Shareholders must now also be entitled to at least 5% of the distributable profits and net assets of a company to claim the relief.
“A minimum 12 month holding period has always been generous and now moving to 24 months, it is broadly similar to qualifying holding periods when Taper Relief was available (abolished in 2008). Businesses that are currently going through a sale or preparing to sale will now need to make sure they meet the new tests which could halt or delay matters. The introduction of the tests for capital and voting rights will mean that shares issued under unapproved schemes such as growth shares will now not qualify for Entrepreneurs Relief when sold.”
Richard Moor, Partner
“The temporary increase in the AIA is great news for manufacturers and other capital intensive businesses seeking to invest in new qualifying plant and machinery, but the reduction of the allowance for special rate items from 8% to 6% is probably to pay for the new Structures and Buildings Allowances.”
Katie De Niese, Tax Manager
“Stamp duty relief has been extended to shared ownership of properties up to the value £500,000. If you’re a first-time buyer in England or Northern Ireland and purchase a shared ownership property up to this value, you’ll now pay zero stamp duty.
“This change comes into effect immediately and will also be applied retrospectively back to the last Budget, so you’ll likely be able to get cash back if you bought since November 2017.
“Income tax will be cut earlier than planned meaning an extra £130 in your pocket if you’re a basic-rate taxpayer. Two changes which were supposed to come in during April 2020 will now apply from April 2019 instead. The personal allowance – the amount you can earn without paying any income tax – will be raised from £11,850 to £12,500, while the threshold at which you start paying higher rate tax will be raised from £46,350 to £50,000.”
Mark Poplett, Tax Adviser
“The new 2% non-residential structures and buildings allowance was unexpected and a reminder of the old Industrial and Agricultural Buildings Allowances that were phased out between 2008 and 2011. This may be of benefit to local farmers erecting new structures for example.”