A quick digest of the things that will affect your business, taxes and NI
It was a pretty uneventful Budget for businesses, if we’re honest. The main news was the scrapping of the annual tax return, which we reported this morning.
Osborne focused more on pensions and savings, economic figures, help for first-time home-buyers, and plans that won’t particularly impact most London businesses and entrepreneurs.
Of course, there was a lot of restating things we’d already heard about – but that’s nothing unusual, particularly this close to an election.
Anyway – here’s what you need to know.
Just don’t get too excited!
Getting rid of the tax return
As we reported this morning, annual tax returns will be replaced by digital tax accounts by 2020 and the way you pay and complete information is being made easier. Here’s more info.
>> As we learnt earlier this week, a major review into business rates has been launched
>> Osborne reconfirmed that he’ll extend the small business rate relief from April
Personal tax allowance
>> The personal tax-free allowance will rise to £10,800 in 2016, then to £11,000 in 2017 – taking almost four million people out of paying income tax
>> The higher tax rate threshold will increase “above inflation”, from £42,385 this year to £43,300 by 2017-18
Nothing new on corporation tax, but just so you know…
>> As we already knew, corporation tax will drop to 20% in April
>> Class 2 National Insurance (NI) contributions for the self-employed will be abolished… but not until the next parliament, so we might have to wait and see what happens there
>> Osborne restated that NI for employees aged under 21 will be scrapped this April
>> He restated that NI for apprentices will be scrapped from April 2016
Clamping down on tax avoidance
The chancellor hopes to raise £3.1bn by clamping down on tax avoidance and evasion. New measures include:
>> Plans to close loopholes to ensure entrepreneurs’ relief can only be claimed by those selling “genuine stakes in businesses”
>> Clampdown on the “agencies and umbrella companies who abuse tax reliefs on travel and subsistence”
>> Businesses will no longer be able to account for overheads incurred by overseas offices and branches when they reclaim for VAT
These new proposals come on top of the Diverted Profits Tax – dubbed the “Google tax” – that will be brought in next month to ensure large foreign companies are less able to avoid UK taxes through clever international accounting set-ups.
EIS and VCT
>> Osborne said he was “announcing changes to the Enterprise Investment Schemes and Venture Capital Trusts to ensure they are compliant with the latest state aid rules and increasing support to high growth companies”. He didn’t elaborate, but details will presumably be in the full Budget documentation
Help for first-time home-buyers… but what about new homes?
>> A new Help to Buy ISA will be aimed at helping home-buyers: the government will add £50 to every £200 you save for a deposit
>> But with no measures announced on house-building, the current shortage of housing looks set only to push prices up further
More measures against banks
>> The government is raising the bank levy to 0.21% to raise an additional £900m per year
>> Banks will no longer be allowed to deduct PPI mis-selling payouts from their taxable profits – and about time too!
Investing in technology and innovation – or is it just lip-service?
>> “We’ll invest in the internet of things,” said Osborne – but he didn’t give any detail on how
>> £600m will go on improving mobile networks to clear new spectrum bands
>> Osborne said he’ll “take steps to… back fintech”, though no detail was given beyond that
>> The government will invest £100m to “stay ahead in the race to driverless technology”. But that might not be nearly enough, bearing in mind Google invested $258m in Uber in 2013, and that’s aside from the investments Google has made in its own driverless car technology
>> £140m will go to “world-class research across the UK into the infrastructure and cities of the future”
>> There is extended funding for PhD students and masters students
>> The chancellor restated the Tories’ aim to deliver fast broadband to more UK areas
London and the regions
>> There were various measures around investing more in enterprise and infrastructure in regions outside London
>> In London, Osborne said there would be “new investment in transport; regeneration from Brent Cross to Croydon; new powers for the Mayor over skills and planning; and new funding for the London Land Commission to help address the acute housing shortage in the capital”
More business news, trends & insights
Here’s what George Osborne said, word for word, on Wednesday 18 March
How many people trust George Osborne to run the economy? Turns out very few