- National Living Wage replaces Minimum Wage. £7.20 p/h in April 2016 increasing to £9 p/h by 2020.
- National insurance bill reduction of further £1,000.
- Corporation Tax dropping to 19% in 2017, and then 18% in 2020.
- Additional 3 Million Apprenticeships.
- Levy on Large Employers to pay for apprenticeships.
- Commitment to the Northern Powerhouse.
- £30 Million support to Transport for the North over 3 years.
- Annual Investment Allowance will be set permanently at £200,000
- Access to more data for HMRC to identify business not declaring or not paying taxes.
- Tripling the number of criminal investigations HMRC can undertake
Original Author: Assent Risk Management.
On 8th July 2015 the Chancellor presented his Summer 2015 budget stating it “puts security first” and “recognises the hard work and sacrifice of the British people over the last five years”. It was also interesting to hear, in the opening of his speech, “We will be bold in reforming education, reforming welfare, delivering infrastructure, building the Northern Powerhouse”.
We look at just some of the items of interest to UK businesses.
A new UK Living Wage
Perhaps the biggest feature of the budget was the commitment to replace the current Minimum Wage with a National Living Wage. Applicable to over 25s, from April 2016 the rate will be £7.20 per hour – set to raise to £9 per hour by 2020.
National Insurance Reduction
There is some debate as to the impact this will have on businesses, however the Chancellor believes that a cut in National Insurance of a further £1000 will go some way to offsetting this increased burden for small medium enterprises. The example given of a business employing 4 full time staff on the new National Living Wage would pay NO national insurance.
Corporation Tax Cut
Continuing the theme from the 2010 budget, the Chancellor announced further reductions in Corporation Tax dropping to 19% in 2017, and then 18% in 2020.
By the Chancellor’s numbers this will benefit over a million businesses and it is his hope that it will encourage private sector investment in training and other infrastructure.
Many businesses in the UK have already taken advantage of the apprentice scheme successfully for both the employer and the apprentice. However there was perhaps an undertone in this budget suggesting that some – perhaps larger employers – had taken advantage of the system.
With the announcement of an additional 3 million apprenticeships came a levy on large employers to pay for them. However it was stated that those who commit to training will be able to “get back more than they put in” – although there are few details around this currently.
The Northern Powerhouse
The idea of a Northern Powerhouse incorporating the “Core Cities” of Liverpool, Manchester, Leeds and Sheffield was given time in the commons during both Prime Minister’s Questions before hand and during the Chancellor’s Speech.
MP Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op) questioned the Prime Minister on his commitment to the Northern Powerhouse with the delay to the electrification of the TransPennine rail line through Stalybridge and Mossley to which the PM replied “We will be pressing ahead with this investment”.
However in the budget, Transport for the North is to be given a statutory footing with Cities and counties in the North having more control over their transport systems. £30 Million in funding over 3 ears was committed to Transport for the North.
Annual Investment Allowance
The Chancellor announced that the Annual Investment Allowance will be set permanently at £200,000 which will allow businesses to deduct the cost of certain purchases, such as machinery, from their profits before tax.
Another sign of the will to encourage businesses to invest on infrastructure in the short term.
More Support for HMRC
Under the theme of “Making sure individuals and businesses pay what they owe” HMRC was given additional support including:
- Access to more data to identify businesses that aren’t declaring or paying taxes they owe.
- Tripling the number of criminal investigations HMRC can undertake into complex tax crime, concentrating on wealthy individuals and companies.