The Chancellor, George Osborne, delivered his first Budget since the Conservatives achieved a majority vote at the recent election. It was the first Budget announced by a majority Conservative since November 1996. Below are the key business measures that were announced.
The Chancellor announced an introduction of a new national living wage for all workers aged over 25. The plans are to boost the current minimum wage of £6.50 per hour to £9.00 per hour by 2020.
The announcement has received a mixed response from businesses.
With the cost of employing staff set to rise, the announcement has been criticised by a number of small businesses. The Association of Convenience Stores has called the announcement a “reckless measure” and suggested that it may have a devastating impact on thousands of convenience stores. This is likely to be the view of many smaller businesses that will have to make some tough decisions regarding their staff.
However, the news has been welcomed by the majority of businesses. Business institutions have also welcomed the announcement with many of them having called for a rise to the minimum wage for some time.
There have been a number of reductions in corporation tax over the past few years. The Chancellor announced a further reduction in corporation tax from 20% to 19% in 2017 and then to 18% in 2020, a move which the Chancellor has suggested will benefit more than 8 million businesses.
Annual Investment Allowance
The Chancellor revealed that the Annual Investment Allowance for small and medium size enterprises (SMEs) will be permanently doubled.
The Annual Investment Allowance allows businesses to offset investment in plant and machinery against tax.
The allowance currently stands at £100,000 but this was due to be reduced to just £25,000 by the end of the year. The Chancellor announced that the allowance will now be set at £200,000 “this year and every single”.
The Chancellor announced a levy on large businesses to help fund training for millions of apprentices.
Clamp Down on Tax Avoidance and Tax Evasion
The government hopes to raise £7.2billion by clamping down on tax avoidance and tax evasion with the HMRC budget being increased by £750million.
Overall, the announcements in the Budget have been welcomed by many and are seen as a major step in the right direction. As with every Budget there are those who will be adversely affected by some of the announcements.
If you would like to discuss how these measures might affect your business, then please do not hesitate to get in touch with one of our commercial solicitors 0845 287 0939. Alternatively please complete an online enquiry form.