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2015 Budget: tax-free savings and more flexible ISAs

Last week marked one of the biggest dates in the financial calendar, in which Conservative Chancellor George Osborne delivered the 2015 Budget.

As a pre-election rally, the Chancellor’s speech to the House of Commons on Wednesday the 18th of March included a recap of what has been done in the last five years. “Today I report on a Britain that is growing, creating jobs and paying its way” were the Chancellor’s opening words. But despite the relevance of the Budget as a pivotal role in the up-coming election, what exactly does it mean for us?

The Budget that “works for you”

Whilst last year’s Budget was a revolution for pensioners, it seems that this year’s is much the same, but for savers. Billed as the Budget that “works for you”, the Chancellor announced the promise of tax-free savings and more flexible ISAs.

Bearing in mind that many of the changes proposed by the Conservative government depend on being re-elected in May – one of the biggest features of the 2015 Budget is the new personal saving allowance.

New personal savings allowance

From April 2016, a new personal savings allowance will reward savers by not taxing the first £1,000 of income for basic-rate taxpayers. Higher rate taxpayers though, will only receive a £500 personal saving allowance, whilst those who pay the top rate will not benefit at all.

“Help to Buy”

One of the other big announcements was a new “Help to Buy” ISA scheme – which will help first-time buyers to get onto the property ladder. Essentially, for every £200 saved by a first-time buyer, the Government will add £50 – allowing new home owners to save for a mortgage from their pre-tax income.

Flexible ISAs

Additionally, according to the 2015 Budget, ISAs will be more flexible. Savers will now be able to withdraw and replace money in the same tax year without losing any of their tax-free allowance. This will mean more options for savers and flexibility in the long run.

Undoubtedly, this year’s Budget has revealed some significant new changes when it comes to saving. First time buyers and basic-rate taxpayers will no doubt benefit greatly. But with interest rates still at an all-time low, it’s hard not to be at least a little wary.

About the Author

Having worked in financial services for over 36 years, Andrew Darling is a specialist in invoice discounting, factoring and trade finance solutions. He currently manages the development of business with higher turnover companies at Bibby Financial Services, specialising in corporate finance for businesses with turnover of £5 million or more.

Could low interest rates threaten the UK economy?

Whilst the majority of news outlets, businesses, corporations and government parties are keen to point out our positive economic stance, it seems that overlooking low interest rates could threaten the UK economy in the future.

Stable recovery in 2014

Ahead of the general election on the 7th of May, Chancellor George Osborne may well be able to claim credit for the strongest annual performance since the start of the financial crisis. An interesting thought when looking back at the coalition government.

2014 saw stable recovery; growth in services, construction, manufacturing and production, drops in unemployment and more stable house prices. But are our interest rates threatening to harm these critical economic developments?

Six years of record lows

At a record low of 0.5%, the central bank’s current interest rate is at rock bottom. It has remained at its emergency setting since the MPC voted to keep the Bank’s low rate back in March 2009. And whilst low rates provide a number of benefits, the risks are undeniable.

The ongoing dangers of low interest rates are according to the Telegraph, a possible increase in inequality, reduced productivity, excessive inflation and making it hard to counter future economic crises.

Interest rates

Many predicted a rise in interest rates at the start of 2015, but after a sharp decline in the rate of inflation – falling way below the target of 1pc – forecasts of a rate hike have been pushed back a whole year to the first quarter of 2016.

With volatile loan rates, declines in fixed rate savings and returns for savers, and record mortgage rate lows, the current economic climate is at a turning point. And only time will reveal the true outcomes of our near-zero interest. But we must be weary of the risks and damage that might be caused by raising rates too late.

About the Author

Having worked in financial services for over 36 years, Andrew Darling is a specialist in invoice discounting, factoring and trade finance solutions. He currently manages the development of business with higher turnover companies at Bibby Financial Services, specialising in corporate finance for businesses with turnover of £5 million or more.

Fuel prices and profitability

We’ve all been a little bit more cheerful when filling up our cars recently, but spare a thought for logistics companies, one of which, the Stobart Group, buys around 170m litres of diesel and jet fuel annually. Famous the UK over for their Eddie Stobart lorries the Stobart Group are one of the UK’s largest logistic and infrastructure firms. Surely they must be beside themselves with happiness that the cost of fuel is going down?

Maybe not, Ben Whawell chief financial officer of the group explained to the Telegraph newspaper recently that fuel prices didn’t have too much impact on their profitability. Whawell said. “We pass the savings on to our customers so we don’t necessarily see such a big gain either way.”

The price of everything

Nearly everything we buy in the UK has to be transported, so lower fuel costs should have an impact on the cost of living, and politically speaking Chancellor George Osbourne is being pressured to pass fuel savings onto consumers quickly, and prior to the election.

Economists are predicting that a fall to $40 per barrel could add 0.6 percent onto the UK’s GDP this year. Oil analysts even believe oil could fall below $35 per barrel. If other haulage firms like the Stobart Group all pass savings onto customers the price of our supermarket shop could drop considerably. This will boost spending and help the economy as well as business owners.

28 million cars

According to the RAC there are 28 million cars in the UK and they suggest that car owners collectively will be £4bn better off if prices remain near current levels. That equates to around £140 per year for the average motorist.

Petrol is now ready to drop below the £1 per litre mark for the first time since May 2009. The big four supermarkets Tesco, Morrisons, Sainsbury’s and Asda are already poised to enter a price war as and when prices drop further, and some fuel discounting is already in evidence in the supermarket sector.

Energy bills, airfares and interest rates

The drop in the price of fuel could also help offset the interest rate rise that has been laying in wait for some time. However, the Chancellor needs to remain vigilant and make sure that firms are passing on savings. There’s only benefit to the UK if falling costs are passed on.

The pressure on energy suppliers to pass on any savings to customers is also building. The energy market hasn’t had an easy time since the start of recession, with rising prices coming at the worst time. If power companies choose to pass on savings to customers this will be good news for UK householders and much needed good publicity for the providers.

Help for business

Small and medium sized businesses are also set to benefit from falling oil prices. Money saved on fuel can be used to expand businesses and invest in more staff. Again, like consumers, SME owners are hoping the savings are passed on and the sooner, the better.

About the Author

Having worked in financial services for over 36 years, Andrew Darling is a specialist in invoice discounting, factoring and trade finance solutions. He currently manages the development of business with higher turnover companies at Bibby Financial Services, specialising in corporate finance for businesses with turnover of £5 million or more.

Andrew Darling discusses Construction Finance

At the UK’s leading independent invoice finance specialist, Bibby Financial Services, we’re constantly looking for ways to improve the way our funding works and what businesses and SMEs look for when it comes to finance.

Bibby Financial Services

Every company, business owner and SME is different.  And naturally, so are each of our services. Our range of products have evolved over the years to reflect the needs of our diverse client base and changing economy. And in 2015, we aim to help even more business owners to fulfil their potential through alternative forms of finance.

Construction Finance

One of our core products is Construction Finance, in which we offer specialist funding for construction businesses. Due to the unpredictable nature of the construction industry, and the problems facing smaller firms – such as payment issues, government red-tape, skills shortages and rising labour and material costs – cashflow and funding can often be effected.

What do we offer?

Providing cash advances against outstanding billing and uncertified applications, we allow businesses to access money earlier, rather than waiting for customer payment. We can fund applications before they are certified and provide full, confidential credit control and sales ledger management services enabling businesses to maintain customer relationships.

An expanding sector

It’s a form of funding which works well in the construction sector, where businesses often have to cope with extended payment terms and debt issues. And as many of the UK’s small construction businesses plan for growth in 2015, it might be time to consider the benefits of alternative forms of finance.

To read more about Construction Finance, head over to the Bibby Financial Services’ website.

You can also find out more about construction SMEs by reading Bibby Financial Services’ new report ‘Planning for Growth: Construction SMEs in the UK’.

About the Author

Having worked in financial services for over 36 years, Andrew Darling is a specialist in invoice discounting, factoring and trade finance solutions. He currently manages the development of business with higher turnover companies at Bibby Financial Services, specialising in corporate finance for businesses with turnover of £5 million or more.

Construction SMEs in the UK

At, Bibby Financial Services, we come into contact with a wide range of enterprises and business owners.

From home grown micro-businesses and SMEs, to creative outlets and corporate enterprises, our job at Bibby Financial Services is to help businesses fulfil their potential and thrive in their dedicated trade.

The construction sector

One of the areas we specialise in is construction and we have been providing funding solutions for the sector for over ten years.

Construction contributes around £90 billion (6.7 per cent) in Gross Value Added (GVA) every year, and provides some 2.93m jobs in over 280,000 businesses. It’s therefore not an industry to be ignored!

Bibby Financial Services research

Many businesses in the construction sector are sole traders, partnerships and small subcontractors who are often ignored in favour of large main contractors and house building giants.

So, in light of this, in the final three months of 2014, our market insight team conducted a study which offers a unique take on the challenges and opportunities that smaller firms face today – such as struggles with cashflow and issues surrounding late payment.

‘Planning for Growth: Construction SMEs in the UK’

Based on a sample of 200 businesses, our study – presented in the report ‘Planning for Growth: Construction SMEs in the UK’ – shows levels of work, opportunities and challenges faced by these SMEs. To find out more you can read the report and download it in full on the Bibby Financial Services Blog.

You can also find out more about Construction Finance on the Bibby Financial Services’ website here.

About the Author

Having worked in financial services for over 36 years, Andrew Darling is a specialist in invoice discounting, factoring and trade finance solutions. He currently manages the development of business with higher turnover companies at Bibby Financial Services, specialising in corporate finance for businesses with turnover of £5 million or more.