Budget 2010: AIFA says mixed news for IFAs

AIFA has welcomed moves to make AIM shares eligible as a tax-advantaged ISA investment, but says the Chancellor held back on support for small businesses.

Darling said the Government committment to preserving ISAs as "simple, flexible and accessible tax-advantaged savings vehicles", would link up with its wish to continue  supporting small and growing businesses.

In a move welcomed by the Association of IFAs (AIFA), the Budget stated: "In this context, [the Government] intends to consult on allowing Alternative Investment Market (AIM) shares to be eligible as a tax-advantaged investment for retail savers."

AIFA director general Chris Cummings says: "IFAs can list on AIM and so this offers potential new sources of capital for IFA expansion."

However, Cummings says today's Budget "only tells half the story", and failed to deliver for small businesses.

"The Budget should have done more to help smaller businesses, such as IFA firms," he says.

He called the National Insurance increase "disappointing", and said the Chancellor should have withdrawn the rise as it acts as a tax on jobs.

Darling laid out several sweetners for SMEs in the Budget, including slashing business rates for one year from October resulting in a tax reduction for over half a million small businesses in England. Around 345,000 of these firms will pay no business rates at all.

He also promised RBS and Lloyds will provide a total of £94bn of new business loans - nearly half to SMEs.

SMEs will also get a new credit adjudicator service to fast-track their credit complaints and examine lending decisions to see if they are fair. It will have legal powers to enforce its judgements, if it believes credit has been wrongly denied.

Elsewhere, AIFA says it "fully supports" Government calls for a review of the default retirement age.

"We need an open and honest debate about our ageing society. The current situation does not recognise the changing nature of retirement, which is now much more of a phased activity. We should recognise and celebrate this change not restrict individual choice," AIFA says.

Tthe current policy of compulsory crystallisation at age 75 should also be part of the review, Cummings says.

"People should not be forced to make a once in a lifetime decision that could result in them being significantly worse off in retirement than if they were allowed a more flexible approach," he says.

AIFA praised Darling's pledge to increase the ISA limit in line with inflation, though warned "the decision to reduce pension tax relief for higher earners, by hitting employer contributions, will have a negative impact on pensions saving".