Budget 2015: What does it mean for your small business?
The central policies affecting start-ups and entrepreneurs in the chancellor’s “long term economic plan” to keep Britain “walking tall”…
With 50 days to the general election, chancellor George Osborne today unveiled his sixth Budget report which made a number of announcements affecting small businesses.
Presented as an “economic plan working for you”, Osborne emphasised the need to support UK enterprise – “we can’t create jobs without businesses” – with the long term goal to keep Britain “walking tall”. Business owners and industry leaders’ reactions to the report have been mixed.
Here are the key policies for start-ups and small businesses should the Conservatives make the next government…
Annual tax returns to be abolished
A major step for freelancers and the self-employed, Osborne confirmed rumours that there would be an end to the annual tax return. Claiming “people shouldn’t be working for the taxman”, annual tax returns will be abolished by 2020 with information HMRC needs automatically uploaded into new digital tax accounts. The chancellor said that this will enable businesses to feel they are paying a “simple single business tax” – “tax shouldn’t be taxing”.
Changes to Entrepreneurs’ Relief
Although this will need to be clarified, Osborne stated that “Entrepreneurs’ Relief will only be available to those selling genuine shares in businesses” in order to negate tax avoidance.
Boost to UK’s “Northern Powerhouse”
A key focus of the 2015 Budget, Osborne made it clear that helping businesses in the North was essential with the North “having grown faster than the South” over the last year. Key measures to support the North include: £13bn investment into travel, power will be devolved to Greater Manchester to give the North “a powerful new voice”, £11m will be invested in tech hubs in Manchester, Leeds and Sheffield, and enterprise zones in the area will be expanded. More significant is the announcement that the new government would trial a pilot scheme to enable Manchester and Cheshire to retain 100% of additional business rates growth
Support for creative industries
With the creative and media sector a major contributor to the UK economy, the next government plans to expand its support for the industry with an increase of film tax relief to 25% and extension of the high-end television tax relief. There will be new children’s television tax relief from April 2015 and a new orchestra tax relief of 26% from April 2016. The video gaming industry will also receive up to £4m in investment and the Skills Investment Fund will be extended with £4m in match funding.
Corporation tax cuts
From April, Corporation Tax for businesses making profit in excess of £300,000 will reduce to 20%, down 28% on 2010 and the current rate of 21%. Corporation Tax for companies with profit of less than £300,000 will remain at the existing level of 20%, meaning the two figures will be aligned. The chancellor highlighted that “businesses need low competitive taxes”.
Faster broadband speeds
The new government will invest up to £600m in better mobile networks and faster broadband speeds. Ultrafast broadband, of a minimum 100 megabits per second, will be made available to “almost all” UK premises.
Fuel duty frozen
Fuel duty will be frozen again for 2015 which, by the end of 2015-2016, would make it the longest duty freeze in over 20 years. Osborne said that the move was helping motorists save “£10 off a tank with the Tories”.
National Insurance cuts for the self-employed
Class 2 National Insurance contributions for the self-employed will be abolished in the next government. Further consultations on this are to be announced.
National Minimum Wage increase
Announced earlier this week, Osborne discussed the planned increase in the National Minimum Wage to £6.70 from October with Britain “able to afford real increases”. Find out more about the increase here.
Investment in Internet of Things
Science and innovation will receive a major cash injection with up to £140m on infrastructure and cities of the future, and £40m in research into what is known as the Internet of Things (IoT). Osborne explained that IoT, featured in our Tech Trends of 2014, is connecting up everything from urban transport to medical devices to household appliances.
Funding to support exporting to China increased
UK Trade & Investment activities in China will benefit from a near-doubling in funding to £15m in 2015-16, with the additional £7.5m targeted at a number of key sectors, including advanced manufacturing, transport, financial services, healthcare and life sciences.