UK Budget 2014 Review: Winners & Losers
Major reforms to savings and pensions took the headlines in yesterday’s Budget, but who really stands to benefit?
Yesterday, the 19th of March, saw chancellor George Osborne emerge from Downing Street with a tattered red briefcase and deliver what was effectively a pre-election Budget. It contained some of the most radical reforms to pensions and savings in decades, although some voices have criticised the chancellor for doing relatively little to help with the cost of living for UK households.
So who were the biggest winners and losers from yesterday’s announcements?
Pensioners and workers who are approaching retirement now have much more freedom and choice when it comes to spending their retirement savings. There will no longer be a requirement to take out an annuity, while retirees will also be able to take more of their pension pot as a lump sum when they give up work. At the moment, anything over a quarter of the total is taxed at 55 per cent, but this will fall to the normal rate of income tax.
Loser: Insurers & Pension Providers
Shares in many large annuity providers fell yesterday. Not only will demand for annuities slump, but a more open market will lead to more competitive pricing in the annuity market – or so the chancellor hopes. What’s more, with every retiree now entitled to free independent financial advice when they leave the workforce, the Financial Times suggests that the government may have “lost patience” with providers.
Winner: Families & Savers
When it comes to tax breaks, savers will do well out of this Budget. Stocks and cash Isas will be combined into a single, simpler account – and crucially, the tax-free allowance will rise to £15,000. The ten per cent tax rate will also be dropped on savings accounts. At the moment this won’t necessarily pay dividends, because interest rates are still tiny, but it’s a positive step for those who can afford to save. Inevitably, campaign groups have already pointed out that little provision has been made to help those who can’t.
Loser: Gamblers & Betting Companies
Raising taxes on fixed-odds betting terminals will have a sizeable impact on gambling firms. William Hill and Ladbrokes both saw their shares slump, and higher costs may well be passed on to consumers. Bingo players are much happier, with taxes halved from 20 to ten per cent.
Winner: Businesses & Manufacturers
In many ways the biggest winner from yesterday’s announcement was business, and smaller firms look the most likely to reap the benefits. The tax-free investment allowance has been doubled to £500,000 – a huge rise which means that the vast majority of UK businesses will pay no tax whatsoever on their annual investments. Given that moves to boost investment have been called for by everyone from the TUC to the Confederation of British Industry, this measure was particularly well received.
Manufacturers stand to benefit even further. Complaints about the impact of energy bills have been addressed with a cap on the carbon price floor, and the scheme which compensate energy-intensive companies have been extended up to the 2019-20 financial year.
In your opinion, who do you think stands to gain, and who stands to lose, from the UK Budget announced by George Osborne?
Share with us in the comments below.