Today (Wednesday 8th July) the Chancellor George Osborne delivered the highly-anticipated Summer Budget 2015. It was the first fully Conservative Budget since 1996 and contained a whole host of new laws and legislations that have set tongues wagging across the board. Some spreading positive word of mouth and others seemingly in utter despair at the newly re-elected government.
Osborne claimed that his proposals manifest a “big budget for people with big ambitions to secure Britain’s future” and aims to “put UK economic security and working people first”. Confidence has been hitting record highs in the world of small business over the past few months as the country continues to rise from a crippling economic recession and the government claims to be fuelling this fire.
Here are some of the highlights from today’s speech that outline the key policies set to effect the UK’s small and medium-sized enterprise market. Changes to Sunday trading hours, Corporation Tax cuts and the announcement of a brand new Living Wage are amongst the most controversial hitting the headlines following this appearance of the infamous little red suitcase this afternoon.
Cuts to Corporation Tax – Osborne declared that following a previous 20% reduction of Corporation Tax that he claims has “brought businesses back to Britain”, rates will be cut further by 19% in 2017 and 18% by 2020. This pledge aims to help more than a million UK businesses grow and be able to “invest in confidence”.
Howard Sears, managing director of venture capital firm, Astuta described the Budget as “frankly barnstorming” and said:
“Confidence among UK business is already strong but these latest reductions in corporation tax will supercharge it.
“As well as sending out an important message to UK business owners, the reduction in corporation tax will give them a strong competitive edge and the all-important breathing space to grow.”
The new Living Wage – Perhaps the most controversial of the Summer Budget revelations was the announcement of a brand new Living Wage because “Britain deserves a pay rise”. Osborne outlined plans to increase the wage which will now start at £7.20 per hour as of April 2016 and rise to £9 by 2020 for people aged 25 and over.
Good news for Sunday shoppers – Sparking debate across social media and splitting the crowd, it was also announced that the responsibility of Sunday retail opening and closing hours will now be devolved to local authorities. Osborne claims that this reformation will allow areas a stronger control over their own economies. This marks the biggest change to trading laws since the 1990s.
Peter Burgess, director at Retail Human Resources is amongst those supporting this proposal. He said:
“It is archaic that large shops still have to close for much of the day on Sunday which is one of the most important shopping days of the week. People do not have to shop on Sundays if they don’t want to; no hands are being forced here. By increasing the time allowed for large shops to open this will reduce pressure on Saturdays and will, in turn, create more jobs. It should be up to local communities to decide, as has been suggested.
“As for convenience stores, they retain their advantage of being convenient as opposed to out of town or in a major shopping area where it is quite often difficult to park. Given the massive swing away from large supermarkets to the High Street, I would have thought they have already had the help they claim they need.”
New National Insurance Contributions policy – As part of the Conservative Summer Budget, Osborne also announced that the government will be increasing the National Insurance contributions (NICs) Employment Allowance to £3,000 a year in attempts to help businesses deal with additional wage costs. This change means that businesses will now be able to employ up to four full-time workers without having any financial NIC obligations.
Changes to Annual Investment Allowance – As of January 2016, the Annual Investment Allowance will be set permanently at £200,000. This means that businesses will be able to deduct the value of items, such as equipment and machinery up to a value of £200,000 from their profits before tax. This proposal aims to help business better plan for long-term spending with the support of full tax relief in the same year of purchasing.
Mark Sismey-Durrant, CEO of Hampshire Trust Bank believes that an increase of the Annual Investment Allowance could be “the catalyst small business need to invest and grow their companies”. He said:
“Small businesses can only succeed with the appropriate financial support and guidance from both the government and industry and therefore today’s announcement by the chancellor will go towards supporting the small businesses which represent almost 50% of our economy.”
Let us know your thoughts on the Summer Budget 2015 by leave a comment in the box below. We’re always keen to know how small business owners are being effected by governmental policies, whether it’s positively or negatively.
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