The key measures businesses need to know from the summer Budget

Here’s a quick roundup to keep you on top of the news

We weren’t sure exactly what to expect from the Budget this summer. Just three short months after the previous one and yet so much has changed.

Osborne no longer has to consider the Lib Dems and can push forward with his pledges from the General Election.

Here are the key measures the chancellor outlined in his speech:

  • “We should cut the deficit at the same pace as we did at the last parliament. We shouldn’t go faster, we shouldn’t go slower,” he said at the start of the Budget.
  • The sale of government assets, such as RBS, will make more money than the previous record in 1987.
  • 2019/20 national debt lower and running a budget surplus, OBR judges it will be the largest surplus in 40 years. “Britain is finally doing the responsible thing.”
  • Richest are paying a greater share of tax than they were at the start of parliament
  • He plans to save £17bn, making a £12m saving from welfare and £5m from clamping down on tax avoidance

Tax

  • Abolishing permanent non-dom tax status
  • 8% surcharge on bank profits
  • Bank levy rate will be gradually reduced over the next few years making the UK a more competitive place to do business
  • Name and shame of serial tax avoiders
  • Insurance premium tax to be raised from November to 9.5%
  • From 2017, for brand new cars only, there will be new Vehicle Excise Duty bands to pay for investment in the roads. Nobody will pay more for the car they already own
  • Freeze on fuel duty and extending the requirement for a first MOT on a new vehicle from three to four years
  • Rise in the tax free allowance from £10,600 to £11,000 next year. Legislate so that it rises with pay
  • Higher rate threshold increased from £42,835 to £43,000 next year

Skills

  • Remove the cap on university places
  • 2016/17 academic year – replace maintenance grants with loans
  • Higher wages “it can’t be right to ask taxpayers to subsidise businesses”
  • “Britain deserves a pay rise and Britain is getting a pay rise” – Next April, for 25 and over, minimum wage will be £7.20 instead of £6.70, working towards a “living wage” of £9 per hour by 2020
  • Cut to National Insurance to help small businesses

Here’s Iain Duncan Smith’s reaction to the Living Wage announcement if you didn’t see it.

 

 

Housing

  • Buy to let landlords only able to offset mortgage interest at basic rate from 2017
  • Rent a room relief is currently frozen but will be raised to £7,500 next year
  • £175k transferable allowance for houses– delivering on pre-election promise

Investment

  • Annual Investment Allowance set at £200,000 permanently, rather than falling to £25,000 helping manufactures and farmers
  • Dividend tax credit to be replaced by tax exemption of £5,000 per person
  • 85% who receive dividends will see no change or be better off
  • Corporation tax will be cut from the current 20% to 19% in 2017, and 18% from 2020, as Osborne repeats the mantra “Britain is open for business”

Welfare and public sector

  • Continue with 1% rise in pay for public sector staff for the next four years – far behind the UK’s current pay growth averaging 2.7%, according to the Office for National Statistics
  • Free childcare for 20 hours a week for working parents of 3-4 year olds from 2017
  • Abolish housing benefit for those aged 18-21
  • Working-age benefits will be frozen for four years, tax credits and local tax allowance, statutory benefits such as maternity pay unaffected. Will be a cut in real terms with inflation
  • Social housing rents cut by 1%
  • “The benefits system should not support lifestyles and rents that are not available to the taxpayers who pay for that system,” said Osborne
  • Reducing benefits cap from £26,000 to £23,000 in London, £20,000 in rest of the country
  • Families earning over £40,000 in London and £30,000 elsewhere will now have to pay market rents on social housing
  • April 2017, families with three or more children will not receive additional tax/universal credit (exceptions for people with twins/triplets). “Not easy but fair,” Osborne said

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