On the eve of last year’s Budget, the housing market was riding a wave of growth, bolstered by the introduction of the Help to Buy scheme the year before. This trend led to rapid house price rises in 2014, with the latest Land Registry figures showing prices in the capital rose by 10.4 per cent in the year to February. This significant increase raised concerns over affordability, particularly with the average house price surpassing the £250,000 stamp duty threshold. In response, George Osborne took the opportunity to reform the stamp duty system in the 2014 Autumn Statement, designed to reduce the tax burden for 98 per cent of purchases, particularly for lower-value properties.
2014 also saw the government focus on addressing the supply side of the housing market, announcing a £500 million fund for small house-building firms in the March Budget and introducing the Starter Homes scheme in December. ONS figures show new housing starts jumped 10 per cent year on year, to 137,010, though this figure still falls well short of the Confederation of British Industry’s estimate that the UK requires 240,000 new homes per year to meet demand. As a result, boosting homebuilding activity to keep prices at a sustainable level remains a key priority going into the 2015 Budget.
Last March, George Osborne announced, “Support for savers is at the centre of this Budget,” raising ISA limits to £15,000, allowing savers more flexibility to transfer their allowance between cash only and stocks and shares ISAs and paving the way for new pensions drawdown rules from April 2015. Since then, the Chancellor of the Exchequer has also removed the 55 per cent tax rate on ISA savings transferred to surviving spouses and pledged to raise the personal tax allowance to £10,600 and the ISA threshold to £15,240 from 6th April.
The key pillars of the government’s support for small businesses in the 2014 Budget included doubling export funding to £3 billion, promising to create 100,000 additional apprenticeships and promising to combat escalating energy bills for manufacturers. However, it was not until December when George Osborne and Vince Cable began to tackle what is arguably one of the most prominent issues for small businesses, launching a full review of the current business rates system. Other key themes for the Chancellor’s Autumn Statement speech included a one-year extension on business rate relief, a £45 million funding package for first-time exporters and investment to reduce regional disparity by creating a Northern Powerhouse.
Following on from these announcements, SMEs entered 2015 on a confident note, with 62 per cent expecting growth in the coming and 63 per cent of mid-sized firms predicting 2015 will be a better year for the UK economy than 2014. Though the overall outlook is positive, challenges remain going into the next Budget, including access to finance.
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