The 2015 Budget: What it Means for Small and Mid-sized Businesses
A look at the key measures from George Osborne’s latest report, including the death of the annual tax return, more regional support and corporation tax cuts
Chancellor George Osborne delivered the 2015 Budget today with promises of continued economic, business and employment growth. Overall the chancellor emphasised that Britain is on a strong road of recovery, declaring that it is “growing, creating jobs and paying its way. Britain is walking tall again.”
Prior to announcing the measures of this year’s Budget, the chancellor’s speech began on the news that the British economy grew faster than any other developed economy at 2.6% in 2014; that the GDP forecast for next year is now 2.3% and that the national debt is now £3bn less.
Here we take a look at what the latest Budget announcements mean for small and medium firms…
National insurance amendments
One of the key measurements for business owners was the chancellor’s announcement that class two national insurance contributions for the self-employed will be abolished in the next government. More details are due to be announced following further discussion.
The death of the annual tax return
Freelancers and small businesses will also no longer be required to submit an annual tax return. Proposed to come into play within five years, going forwards the information HMRC requires will be automatically uploaded into new digital tax accounts, reducing red tape and simplifying a previously lengthy process.
Supporting the “Northern Powerhouse” and the manufacturing industry
Continuing on to highlight that support will be spread throughout the UK, Osborne announced that whilst the North actually grew faster than the South last year, more will be done to continue to support the Northern Powerhouse. Greater Manchester will be allowed to keep 100% of the additional growth in local business rates.
In addition, the government will be working with Transport for the North and investing £13bn to improve roads and rail connections between the major cities of the North as well as assigning £11m to expand tech hubs in Manchester, Leeds and Sheffield.
Further regional support
As well as the government’s focus on supporting the Northern Powerhouse, the Budget also included support for new and existing businesses regionally with the tax rates offered to Manchester also being presented to Cambridge.
Other regional business support includes investment of £60m to the West Midlands’ Energy Research Accelerator, a new rail franchise for the South West and the Severn Crossing’s toll rates are to be cut from 2018.
Finally, Osbourne added that the government will be assisting with transport and business support improvements in West Yorkshire, as well as introducing 10 new enterprise zones regionally. Following a deal with Cardiff city, the government will also begin negotiations on the development of the Swansea Bay Tidal Lagoon.
National Minimum Wage increase
Following the recent minimum wage increase, Osborne declared the National Minimum Wage is on course to be more than £8 by end of the decade.
Investing in technology and science
The 2015 Budget pushed further measures to bring ultrafast broadband of at least 100 megabits per second to nearly all UK premises, following criticism from the Federation of Small Businesses after recent research revealed that half of rural small businesses are effected by inefficient broadband.
The government, whilst promoting manufacturing, will also be pushing science and technology innovation with Osborne declaring that £140m will be invested in research into the infrastructure and cities of the future, as well as £40m in research into the rapidly growing tech trend, the Internet of Things. Furthermore, the government will also be investing £10m into the launch of a new UK research initiative into digital currency technology and an additional investment of £600m to improve mobile networks was revealed.
Osborne declared the government will be upping its support to help connect Britain to the fastest growing economies in the world; increasing UK Trade Investment’s (UKTI) support resources by nearly double to £15m in 2015-16, with the additional £7.5m directed at key sectors including transport, manufacturing, financial services, healthcare and life sciences.
Creative industries support
Creative and media industries were also presented with some positive news as Osborne announced a series of tax measures in order to support Britain’s “cultural centre”, which included more generous television and film tax credits (increasing tax relief by 25%) as well as investment support of £4m for video games businesses. The Skills Investment Fund will also be extended with an additional £4m in funding.
Corporation tax cuts
For businesses making profit in excess of £300,000, corporation tax will be reduced to 20% from the current 21%. For businesses operating with profit of less than £300,000, the rates will stay the same at 20%.