Budget 2015: The key measures for businessComments Off on Budget 2015: The key measures for business
Here’s a round of the key elements of the ‘Summer Budget’:
The Office of Budget Responsibility forecasts growth for economic 2015 at 2.4% – down from a previous estimate of 2.5% – then 2.3% in 2016, then revised up to 2.4% in 2017, and for rest of decade.
— Ben Chu (@BenChu_) July 8, 2015
Growth last year was revised up to 3% from the initially projected 2.6%, making Britain the fastest growing advanced economy in the world.
Deficit and surplus
This year borrowing will be £6 billion lower at £69.5 billion, but over the five years of this Parliament, the borrowing bill will be £16 billion higher than was previously predicted.
That means it will take a year longer than planned for Britain to run a surplus.
In 2018-19, for which earlier figures recorded a £5 billion surplus, a deficit of £6.4 billion is now pencilled in.
Corporation tax will fall from its current level of 20% to 19% in 2017 and by a further 1 percentage point in 2020.
Osborne said he wanted to send out a message “loud and clear across the world that Britain is open for business”.
The Chancellor confirmed that the sale of the taxpayers’s 79% stake in Royal Bank of Scotland would start this year.
He said more money would be raised through state asset sales than the previous record set in 1987.
Bank levy to be replaced
The bank levy – a tax on banks that has become increasingly unpopular with lenders – will be replaced by an 8% surcharge on profits.
The bank levy has been cited by banks like HSBC among the reasons behind their decisions to consider moving their headquarters out of the UK.
As expected, improving Britain’s sluggish productivity was put at the heart of the budget.
Osborne boosted the UK’s annual investment allowance to £200,000 and boosted road building through new car taxes.
He also attempted to address the skills problem facing Britain through various measures, including an apprenticeship levy for all large firms.
A detailed productivity plan will be published on Friday.
A new national living wage of £9 an hour will be introduced by 2020.
The compulsory level of pay will begin next April at £7.20 and then rise gradually.
It will mean that those on the minimum wage should see their pay rise by over a third during this Parliament, which equates to a cash increase of over £5,000, Osborne said.
Personal tax allowance
The amount of money Britons can earn before they start paying tax will be raised next year from the current level of £10,600 to £11,000.
People will have an extra £905 in their pockets as a result, according to the Treasury’s calculations.
Osborne wants the threshold to hit £12,500 by 2020.
The dividend tax credit – a reduction on the amount of tax paid on income from shares – will be replaced by a a new £5,000 tax-free dividend allowance from April 2016.
The tax rates on dividend income will be increased, however.
“This simpler system will mean that only those with significant dividend income will pay more tax,” the Treasury said.
The fuel duty will remain frozen for this year, Osborne said.
Cheaper petrol: average petrol prices dipped to their lowest level for five years, according to the AA (Picture: PA)
Top tax rate lifted
From 2016, the 40% top rate of tax will apply only to those earning over £43,000.
At present the higher tax rate begins at £42,385.
Osborne declared an end to permanent non-dom status – which allows some individuals to pay tax on offshore income only when they bring it in to the UK.
“British people should pay British taxes in Britain and now they will,” Osborne told the Commons.