The Chancellor, George Osborne, delivered his March 2015 Budget Report on 18 March 2015. This update summarises the key announcements for lawyers advising on finance transactions, including:
Government initiatives to boost access to finance and competition in lending to SMEs.
Changes to the taxation of certain finance transactions.
The Chancellor, George Osborne, delivered his March 2015 Budget Report on 18 March 2015. This update summarises the key announcements for lawyers advising on finance transactions.
For details of Practical Law's comprehensive coverage of the March 2015 Budget, including tailored practice area updates, see Practical Law, 2015 Budget coverage.
SME banking: access to finance and competition
The government announced various measures to support access to finance by small and medium-sized enterprises (SMEs) and competition in lending to SMEs. The following may be of particular interest to finance lawyers.
British Business Bank
SME access to finance
To improve access to finance for smaller firms, the British Business Bank is launching a pilot "Help to Grow" programme to increase the supply of growth loans to firms that need between £500,000 and £2 million to achieve their potential. The March 2015 Budget announced a request for proposals to deliver the pilot, which will facilitate up to £100 million of finance for growing businesses.
The British Business Bank will shortly be inviting expressions of interest from credit reference agencies and finance platforms that wish to be designated by HM Treasury to receive SME data from banks under powers contained in the Small Business, Enterprise and Employment Bill currently before parliament. This will lower barriers to entry and level the playing field by allowing small banks and non-bank providers access to potential SME borrowers and the information held on them by the big banks, allowing them to compete more effectively.
As announced in the 2014 Autumn Statement (see Legal update, 2014 Autumn Statement: key finance announcements: Peer-to-peer lending), new legislation will be introduced to allow individuals who make loans through peer-to-peer (P2P) platforms to offset bad debts arising against the interest they receive from P2P loans when calculating their taxable income. These changes will have effect for loans made from 6 April 2015. This measure will not be included in the first (pre-general election) Finance Bill of 2015. Depending on the outcome of the general election on 7 May 2015, it may be included in a future Finance Bill, with draft legislation currently planned to be published in 2015.
As part of the review of the legislation on corporate debt announced at Budget 2013, the government will repeal rules concerning loans made to UK companies by a connected company in a non-qualifying territory.
Following the review announced at Budget 2013, the government will make wide-ranging changes to update, simplify and rationalise the legislation on corporate debt and derivative contracts. These will include a clearer and stronger link between commercial accounting profits and taxation, basing taxable amounts on items of accounting profit or loss. It will also include introduction of a new relief for companies in financial distress and new rules to protect the regime against tax avoidance.
As part of the March 2015 Budget, the government confirmed that it intends to proceed with its reform of the loan relationships and derivatives rules and that its proposed measures are (presumably, substantively) unchanged from those that were announced in the 2014 Autumn Statement and set out in draft legislation that was published a week later. However, these measures will not be included in the first (pre-general election) Finance Bill of 2015. Depending on the outcome of the general election on 7 May 2015, they may be included in a future Finance Bill.