The new Chancellor George Osborne said his first budget was both ‘unavoidable’ and an ‘emergency’ and yet many of his policies had the look of being well thought out and planned.
The changes to CGT will mean a modest amount for the average private investor who currently does not make full use of their annual allowance, and the increasing to relief for entrepreneurs from two million to five million, while raising the rate to 28% seems a fair and reasonable compromise.
It is always going to be a near-impossible balancing act to make the taxation of both income and capital gains equitable, particularly given the need to encourage new employment and raise income.
The full spending review in October will be the point at which the true emergency nature of the nation’s economic plight becomes apparent and the unavoidable consequences of the high levels of debt will start to be unavoidable.
There will be those who cry foul over the rise in VAT, but it was largely inevitable, and, ironically, while VAT did go up universally, the Chancellor did not follow the usual route of his predecessors and raise the duty on fuel, cigarettes and alcohol.
Mr Osborne signalled the start of a sensible approach to the whole reform of pensions with the removal of compulsory annuitisation at 75, which has long looked like an anachronism, and the increase in the male retirement age from 65 to 66.
His intention to have a series of reviews over public sector pensions, which will report as early as September under the remit of the former Labour pensions secretary John Hutton, was an intelligent move as consistency of personnel in this ministry has been a reason for such as a disjointed set of policies over the last two decades.
Equally, restoring the links between the state pension and the higher rate of RPI, CPI or the earnings index was another simple, yet effective and fair measure.
Mr Osborne’s Budget did not satisfy everyone, but he signalled his desire to tackle the key issues facing both the nation’s finances and that of individuals, and with an element of self-interest for the financial services industry, it should also provide many good financial planning opportunities for advisers.
