Business and pensioners come out on top in Osborne’s Spring budget

Comment by Brendan O’Brien; Managing Director Breeze & Wyles Solicitors LLP
UK business has been offered a hand-up in the latest statement from Chancellor George Osborne, with a package of measures designed to further stimulate the economy.
This year’s Spring budget was made against a radically different background to 12 months ago, when the Office for Budget Responsibility had downgraded the 2013 growth prediction to just 0.6%. This year, however, the Chancellor was able to announce a growth target of 2.7%, and 2.3% next year, higher than previously forecasted by the Office for Budget Responsibility.
Headlines for individuals included raising the personal allowance for income tax to £10,500 next year and capping of fuel duty.
But much of the focus of George Osborne’s Spring Budget 2013 was on measures aimed at stimulating business in Britain. These included:
• A doubling of the annual investment allowance to £500,000 a year, in a significant move which will cost the Treasury £2billion
• A £7bn package designed to cut energy bills for British manufacturers
• Funding to support 100,000 more apprenticeships for small businesses
• A three-year extension for business rate discounts and enhanced capital allowances in enterprise zones
For pensioners and those coming up to retirement the story was designed to cheer, as was an announcement that duty on alcohol would be held at current rates. For pensioners, there is a relaxation of the rules regarding how a pension pot is converted into income. Now there’s the freedom to drawdown a pension pot at retirement, with complete freedom as to how it is invested, instead of being forced to buy an annuity. There was also the announcement of a new pensioners’ bond savings scheme from January to all people over 65, paying interest rates of 2.8% for one-year bonds and 4% for three-year bonds.
And for all savers, there’s a simplification on ISAs, enabling stocks & shares and cash ISAs to be merged into one pot, with an increased annual savings limit of £15,000.
Turning his eye to tax avoidance and loopholes in the corporate world, the Chancellor announced that HM Revenue and Customs would be given more power to collect outstanding tax debts and he also dramatically reduced the level at which 15% stamp duty is levied on residential property purchased through a company, often called a corporate envelope. With effect from midnight on Budget Day, the 15% rate became payable on all properties from £500,000 upwards; the starting point was previously £2million.
Also announced was an extension of the Help to Buy scheme that is intended to help people to get on the home-ownership ladder and stimulate the construction industry.
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This is not legal advice; it is intended to provide information of general interest about current legal issues.

Property owners carry the can long after the floods have subsided

Property owners who are finally cleaning up after flooding and dealing with their insurance claims are being reminded that they will have to re-live the experience when they come to sell.
And for recent buyers who may have discovered their new home was wrongly presented as not having suffered flooding in the past, the courts may be the next stop.
Said John Appleton of Breeze & Wyles Solicitors LLP : “Anyone buying or selling needs to be careful about investigations and responses when it comes to flooding. Although the general principle is ‘buyer beware’, where a property owner tries any cover up when answering questions in the pre-contract stage, there may be a case for compensation if it’s found that the answers were untrue or fraudulent.”
Most property transactions use the Law Society’s pre-contract property information form to collect information from a seller, which nowadays includes specific questions about whether any part of the property has ever been flooded. Where any flooding is reported, the seller has to explain what caused it, such as ground water or a river breaching its banks.
And sellers who have given false answers to pre-contract questions have found themselves facing the consequences. In a case that went to the High Court in 1983, Jones v Emerton-Court, the seller of a house in Devon said there had never been any flooding to the property, but when this was proved to be untrue, the court awarded the buyer damages to cover a reduced value for the property as well as compensation for inconvenience.
Others involved along the purchase route may also have a responsibility to a buyer. Where a surveyor has been asked to undertake a full building survey, they could be potentially liable if they reasonably could have identified any potential for flooding at the property. Similarly, the conveyancing process should include relevant searches and additional pre contract questions if an area is known to be subject to flooding, and the buyer should be kept informed about the risk.
He added: “Even in today’s buoyant markets, sellers sometimes imagine any negative information such as previous flooding will put the buyer off, but it’s really not worth the risk to fudge your answers, it’s just opening the floodgate for an even more serious danger – this time the courts and claims for compensation.”
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This is not legal advice; it is intended to provide information of general interest about current legal issues.

Pre and post nups look set to be binding in future

Pre and post nuptial agreements are likely to be given binding status, in a move that’s intended to give couples a more predictable outcome on divorce.
The Law Commission's report, Matrimonial Property Needs and Agreements, proposes that the agreements be enforceable as contracts, but only after both partners' financial needs, and any financial responsibilities towards children, have been met. Both parties would also need to have disclosed all material information about their financial situation and both must have received independent legal advice.
Under the current law, couples can make pre- and post-nuptial agreements but no one can be certain they will be upheld, although they have been gaining in weight since the Supreme Court ruling in the 2010 landmark case of Radmacher v Granatino. The Courts generally look favourably if an agreement has been “freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”.
But at the same time that the Law Commission published its proposal, an heiress to a fortune from her father’s media company which created Bob the Builder, was being told to buy her ex husband a house, at a cost of around £1.2m, despite a series of apparently cast-iron nuptial agreements being in place.
The ex wife is Victoria Luckwell and her ex husband was Francesco Limata, who agreed that he would not make any claim either during or after the marriage in relation to his wife's separate property or to gifts made by her wealthy family. The pre nuptial agreement was followed by two supplemental agreements during the course of the marriage, when the wife received gifts from her parents.
And despite the judge agreeing that if the pre-marital agreement had not been made, the marriage would not have taken place, and neither would the further gifts to the wife have been made without the supplemental agreements, he pointed to the importance of fairness. Justice Holman concluded that the former husband was "now, on any view, and in the context of this case, in a predicament of real need" and that it would be wrong for the children to experience two wholly different lifestyles when visiting each parent.
Explained family law expert and Arbitrator Olive McCarthy MCIArb of Hertfordshire based solicitors Breeze & Wyles LLP: “At first sight, this case may look as though it’s going against the recent proposals, but it is really a reflection of the role the family courts have always taken, which is to do the best by families following divorce and not to discriminate on grounds of gender. It’s about fairness, and whilst it is certainly likely that nuptial agreements will have greater weight in future, that principle of fairness will remain an overriding factor.”
She added: “Talking about money is often seen as unromantic, especially in the run up to a wedding, but there is a lot to be said in being able to sit down and discuss financial matters openly at the outset and this can be a good way to enter a marriage, making these decisions when you are on good terms and want the best for each other. A pre or post-nuptial agreement may not be appropriate for every couple, but where there are significant assets or children from previous relationships, it certainly makes sense. If the marriage unfortunately breaks down, there is if properly entered into, an agreement that provides for settlement allowing the parties’ ownership of their situation at what can be an extremely difficult time and that is priceless”.
Web site content note:
This is not legal advice; it is intended to provide information of general interest about current legal issues.