Another year, another austere Budget.

As usual, I’m pleased to provide the following overview of the main points, with some thoughts and balanced opinions thrown in.

Overall, the headline figures (growth, deficit, borrowing) were as bad or bleaker than previously hoped, but I don’t think anyone’s surprised by that.

Here are some of the main points (in no particular order):

- Help for small businesses: a new ‘Employment Allowance’ means businesses will be exempt from the first £2,000 of National Insurance contributions from April 2014. That means a small business could employ its first member of staff on a salary of £22,400 a year and pay no NI. 450,000 small businesses are expected to pay no National Insurance at all as a result.

- Reduction in Corporation Tax: from 21p to 20p from April 2015 (accelerating previous plans), and bringing small and large company tax rates into line – thereby doing away with the complicated system of marginal reliefs.

- Increase in the Personal Allowance: (the first £8,105 a year of earnings that are currently free of income tax) to £9,440 in April, as planned, and to £10,000 in April 2014. This is year earlier than expected, and satisfies one of the Lib-Dems’ main policies. The basic-rate tax band will be reduced, so anyone paying higher-rate tax won’t benefit (as with previous rises in the Personal Allowance). Anyone earning over £120,000 a year will be worse off as a result.

- Tax-free childcare: working parents will get basic-rate tax relief on the first £6,000 of childcare, per child (i.e. a saving of £1,200 a child) from 2015. Families where one member earns over £150,000 a year won’t be eligible.

- Child Trust Funds: the government will launch a consultation on whether to allow the transfer of CTFs into newer (typically more competitive) Junior ISAs. This is good news for anyone with a Child Trust Fund.

- Help to Buy (equity loan): two new schemes will be launched to help people trying to get on the housing ladder. The first (“equity loan”) will offer up to 20% of the price of a new build property (up to £600k in value) to help buyers reach a 75% Loan-to-Value mortgage. These loans will only be available on owner-occupied properties with capital repayment mortgages (i.e. not interest-only) and will be interest-free for five years followed by a rate of 1.75% rising in line with inflation , repayable at any time in the life of the mortgage or on sale of the property. The scheme will be launched on 1st April 2013.

- Help to Buy (mortgage guarantee): the other new scheme is the “mortgage guarantee” which will apply to lenders to encourage them to offer high Loan-to-Value mortgages by providing a guarantee on the high Loan-to-Value part of the loan. Guarantees will be available on any property (not just new build) also up to a property value of £600,000. £12bn of capital will be provided, enough to cover around £130bn of new mortgages. The scheme is planned to launch in January 2014.

- AIM: stamp duty on purchases of shares on the Alternative Investment Market (“AIM”) and other small markets will be scrapped. This should encourage investment in small-cap companies, but we at Kennedy Black continue to think that AIM is not a suitable market for retail investors, for a variety of reasons (happy to explain if you’re interested).

- SEIS: The government has extended the Capital Gains Tax holiday on investments into Seed Enterprise Investment Schemes (“SEIS”) for another year. Any investors making capital gains in 2013-14 will receive 50% CGT relief when they reinvest those gains into seed companies in either 2013/14 or 2014/15.

- Long-term care: Some of the recommendations from the Dilnot Report will be introduced, albeit not in their original form. A £72,000 cap on care costs (i.e. not food/accommodation) will be introduced in 2016. At the same time, the means test for state support (currently £23,000 of assets) will rise to £118,000. Both of these measures are to be commended but we feel the government could have gone further (Lord Dilnot recommended a cap of £35,000, for example).

- Fuel duty: fuel duty has been frozen for two years and the ‘escalator’ (future rises) abolished.

- Beer duty: the government has scrapped the planned 3p rise in beer duty and instead cut it by 1p from Sunday night. If you fancy a beer on Monday, let me know…

- MPC: For those interested in economic policy, there will be a change to the Bank of England’s Monetary Policy Committee remit. While the inflation target will remain at 2%, the mechanics of the governor’s open letter in the face of above-target inflation will be amended and the new governor will have “unconventional instruments” at his disposal.

And it is this final point that seems to have had the biggest impact on financial markets, with Sterling extremely volatile as a result as investors digest the impact of these changes.

Otherwise, it’s low-income, beer-drinking property speculators who seem to be the biggest winners.

I’m pleased to publish the latest edition of our Private Client Newsletter, incorporating some important tax planning ideas for the end of the tax year.

We also try to illustrate yet more short-comings from active fund managers, most of whom appear to have been taken by surprise by the strongest start to the year for stocks since the 1980s. If the professionals can’t get it right, we’d like to know what precisely are investors paying for?

March 2013 KBWM Private Client Newsletter (requires Adobe Reader)

We include a short but interesting piece about why the language you speak may be holding you back you from saving for retirement.  And we continue with the third in our series about why humans are psychologically wired to be poor investors.  Turns out we’re all over-confident as to our own abilities.

We’re very pleased to post the below video, where Ben discusses investment platforms with Jun Merrett at Citywire.

We’re pleased to report that Kennedy Black Wealth Management has once again featured in City A.M, this time offering guidance to investment newbies.  It’s particularly nice to see us get top billing above some big names in the industry.

I am delighted to attach below the link to our latest Private Client Newsletter, inspired by those wonderful men and women of Team GB.  We hope it makes up for those, like us, suffering from the post-Olympic blues.

August 2012 KBWM Private Client Newsletter (requires Adobe Reader)

As we explain, we hope that a bit of Olympic inspiration might help you achieve your long-term goals. As Team GB has adequately demonstrated, there really is no excuse for not planning big.

Furthermore, we also include an analysis of Kennedy Black Wealth Management’s risk-rated portfolio performance compared to our peers (be that multi-manager funds, other advisers or discretionary fund managers). In the interests of transparency, this is something we intend to update on a regular basis.

The Coalition government has this morning announced the changes to pension legislation that were first contemplated in June’s Budget.

To summarise, from April 2011 the Annual Allowance will reduce from £255,000 to £50,000. This is the most an individual can put into a pension in any tax year and get full tax relief. Furthermore, from April 2012 the Lifetime Allowance will reduce from £1.8m to £1.5m. This is the most an individual can put into a pension in a lifetime and get full tax relief.

This is another nail in the coffin for the public’s perception of pensions. I am firmly of the belief that if you still have 20-40 years to go to retirement, then you cannot expect the Government or even your employer to bail you out – the responsibility resides firmly with the individual. Yet the Government sees fit to reduce the appeal of pensions ever further. The only saving grace is that they weren’t as aggressive as originally proposed (they had suggested in the Budget that the Annual Allowance would fall to between £30,000 and £45,000).

They also claim that the new system is going to be simpler, but the reduction in the Lifetime Allowance presents problems to anyone who has already built a pot in excess of the new limit. When the Lifetime Allowance was first introduced in 2006, a whole series of complicated rules had to be introduced to protect people in exactly this situation. I can only imagine that the Government has given itself an extra year (to April 2012) because they recognise the complexity involved.

In my opinion, disincentivising pensions is a short term fix that creates longer term problems as fewer and fewer people opt to plan for their retirement. I’m worried enough about pensions (or rather the lack of them) as it is.