16 Mar 2016

Key points from this year's budget

George Osborne delivered his eighth budget as chancellor today. Described as a budget that “puts the next generation first”, we round up the key points for social enterprises.

Business Taxes
- Headline rate of corporation tax  - currently 20%  - to fall to 17% by 2020.
- Capital gains tax lowered from 28% to 20% for top rate taxpayers, and from 18% to 10% for basic rate taxpayers.
- The VAT registration threshold will increase in line with inflation to £83,000 from 1 April 2016.
- Class 4 NI contributions will be reformed so that the self-employed continue to build entitle­ment to the State Pension and other contributory benefits.
- £1,000 allowance for property income and £1,000 allowance for trading income will be intro­duced from April 2017. Individuals with property or trading income below £1,000 will no longer need to declare or pay tax on that income.

Business Rates
- London gets full retention of its business rates next April, three years earlier than planned.
- From April 2017, small businesses that occupy property wtih a rateable value of £12,000 or less will pay no business rates.
- Annual threshold for small business tax relief to be raised from £6,000 to a maximum of £15,000, exempting 600,000 firms.
- Business properties with a rateable value under £12,000 will qualify for 100% relief, while properties with a rateable value between £12,000 and £15,000 will qualify for tapered relief.

Business growth and support
- Further steps have been announced for the allocation of the Local Growth Fund, including up to £1.8 billion allocated through a further round of Growth Deals with Local Enterprise Partner­ships later in 2016.

Employment Law
- A consultation will take place on how to extend Shared Parental Leave and Pay to working grandparents.
- National Minimum Wage for workers aged 21-24 will be set at £6.95 from October 2016.

Self-employed
- From 2018 businesses, the self-employed & landlords keeping their records digitally and providing regular digital updates to HMRC will be able to opt for pay-as-you-go tax payments.
- Self-employed Working Tax Credit claimants will be able to access business support.
- The DWP will trial face-to-face support from Jobcentre advisors for self-employed Working Tax Credit claimants.

The State of the Economy
- Growth of 2% forecast for 2016, revised down from 2.4% in November's Autumn Statement.
- Forecast growth of 2.2% and 2.1% in 2017 and 2018, revised down from 2.4% and 2.5% four months ago.
- The UK will still grow faster than any other major Western economy and is on course for a budget surplus.
- A million jobs forecast to be created by 2020.
- Inflation of 0.7% forecast for 2016. 

Borrowing
- Debt as a percentage of GDP is accordingly above target, but the level of national debt is in cash terms £9bn lower than predicted.
- The deficit is forecast to fall to 2.9% of GDP in the next financial year, dropping to 1.9% in 2017-18, and to 1% in 2018-19.

Savings
- Tax relief on financial advice.
- “Help to save” for lower income savers.
- The ISA limit will be raised to £20,000 from around £15,000.
- New Lifetime ISAs for those under 40, offering £1 from the government £4 saved each year.

Pensions
- Increase in contributions from public sector employers.

Personal Taxes
- The tax free personal allowance will increase to £11,500 next year.
- An increase in the 40p tax threshold to £45,000 from next April.
- Duty on beers, spirits and the majority of ciders will be frozen.
- Tobacco tax increase.

Fuel Duty
- Fuel duty will be frozen for a sixth year in a row, saving £75 for the average driver.

Health
- A new levy on producers of sugary drinks in an effort to tackle childhood obesity. This aims to raise £520m in a two-part levy on companies – one for total sugar content above 5g per 100ml and one for drinks with more than 8g per 100ml – to be introduced in two years’ time. Pure fruit juice and milk are excluded. It will be used to fund sport and longer school days.

Oil and Gas
- £1bn tax cuts as the supplementary charge on oil and gas is cut from 20% to 10%.
- Tax on North Sea oil to be abolished, with changes backdated from the start of the year.

Education
- Every primary and secondary school will be in the process of becoming an academy by 2022.
- 25% of secondary schools will be able to opt into offering a longer school day from September 2017.
- Government will look at teaching maths to 18 for all pupils. 

Infrastructure
- £700m will be spent on flood defences.
- £80m allocated to building Crossrail 2 and £60m on HS3.

Climate Change
- An increase in the climate change levy from 2019.
- An end to the carbon reduction commitment energy efficiency scheme.
- £730m to back renewables.

Stamp Duty
- To raise £500m a year, from Thursday, commercial stamp duty will be zero on properties up to £150,000 and 2% on the next £200,000, but a top rate of 5% on £250,000.

Homelessness
- £115m to reduce rough sleeping. 

Source: BBC, The Guardian, HM Treasury