A new ISA aimed at getting the under-40s to save more, tax on sugary products, a cut in tax for oil and gas firms and a likely increase in insurance premiums are some of the themes relevant to UK investors.
We’ve covered the new Lifetime ISA in a separate story, but here are the main stories in terms of key stock movements following the Budget.
SOFT DRINK SELLERS
Chancellor George Osborne unveiled a tax on the makers of sugary soft drinks to tackle childhood obesity.
The news sends shares in IRN-BRU maker A.G. Barr (BAG) 4.2% lower to 531p, Vimto supplier Nichols (NICL:AIM) 7.9% south to £12.02, with Fruit Shoot-to-Pepsi Max brands play Britvic (BVIC) 2% easier at 695p.
Stockbroker Hargreaves Lansdown (HL.) surged around 3.6% during the Chancellor's speech as he announced plans to create a new Lifetime ISA, which includes a 25% Government bonus on savings of up to £4,000.
Smaller and less liquid stockbroker Share (SHRE:AIM) gained around 1.1% with trading in the stock around three times its average daily volume by 2pm.
Wealth manager and life insurer St James’s Place (STJ) also received a sharp boost from the move, spiking around 2.2% during the Chancellor’s speech.
Insurance premiums are set to rise after the Government once again hiked the tax on the industry. Firms will now be charged 10% of all premiums received, up from the 9.5% it set last year.
If the 50 basis points rise in the levy, which is lower than the 3% some had expected, is passed onto consumers the average combined home and contents insurance policy would increase by £1, according to the Government.
The average car policy would increase by 2% a year, according to Government estimates. The increased tax will pay for flood defences.
Speaking to SHARES earlier this week, insurer Hastings’ (HSTG) chief executive said a price rise would see many consumers using comparison websites to find a better deal.
OIL AND GAS
Osborne offered some small crumbs of comfort to a hard-pressed oil and gas sector. The UK oil and gas industry operates under a regime which includes a ring-fence corporation tax – computed in a similar way to ordinary corporation tax – but with different rules for the treatment of losses, 100% first year capital allowances and a higher rate of 30% on all profits.
On top of this there is a supplementary charge – previously levied at a rate of 20% but cut to 10% in the new Budget.
The petroleum revenue tax – a field-based tax on profits which applies to fields given development consent before March 1993 – is to be effectively scrapped. This had been levied at a rate of 50% and is deductible for the purposes of computing profits charged to ring-fence corporation tax and the supplementary charge.
It is questionable the difference this will make in the short-term given a lot of operators in UK waters are not making money at current oil prices. Nevertheless, North Sea-focused firms such as Enquest (ENQ) and Parkmead (PMG:AIM) are up in the wake of the announcement. Enquest gains 3.7% to 14.77p and Parkmead is up 5.7% to 65.5p.