Having previously focused on the news for the education sector following the Budget 2016, here’s our update on the main outcomes for employers.
It looked to be a positive Budget for employers and businesses, both big and small, as a number of tax cuts were announced.
The key headline was the reduction of corporation tax; by 2020, businesses will only pay corporation tax of 17%, down from the current rate of 20%. Chancellor George Osborne has indicated he’d like to see major businesses relocate their headquarters to the UK, and argues this tax cut is likely to improve the UK’s image to businesses abroad. He had words of caution, however, stating “the global economy is at a delicate juncture.” Carolyn Fairbairn, Director-General of the CBI, agrees with the cut, commenting: “The reduction in the headline corporation tax rate sends out a strong signal that the UK is open for global business investment, and reforms to Interest Deductibility are rightly in line with the international consensus.”
The Budget also contained welcome news for small organisations, as small business rate relief has doubled; this means that around 600,000 businesses which occupy property with a rateable value of £12,000 or less will pay no rates, while businesses occupying a property with a rateable value between £12,000 and £15,000 will receive tapered relief. Furthermore, the threshold for the standard business rates multiplier will rise to £51,000, meaning 250,000 smaller properties will no longer be part of the higher rate.
2 new tax-free £1,000 allowances have been introduced for people who make money from occasional jobs – those who sell their own goods, services or accommodation online, provide lift shares or rent items. In a similar vein, Capital Gains Tax (CGT) has also been cut; the higher rate will be reduced to 20% from 28%, while the basic rate will become 10%, down from 18%. The self-employed also have reason to be pleased – from April 2018, Class 2 National Insurance contributions (NIC) will be scrapped. The government states this will represent an annual tax cut for 3.14 million self-employed workers, equalling £134 on average.
The government has pledged support to the oil and gas industry, stating it “delivers significant economic benefits, supports hundreds of thousands of jobs and supplies a large portion of the nation’s primary energy needs.” Its announcements include reducing Petroleum Revenue Tax from 35% to 0% and the Supplementary Charge from 20% to 10%. This, the government argues, will “send a strong signal that the UK is open for business”. In total, there will be around £1 billion in support for the sector, and we hope this will contribute towards the creation of jobs in this sector, and the supply chain that contributes to that.
The government also announced a number of large-scale, long-term infrastructure projects based around supporting the ‘Northern Powerhouse’, including big changes to the A69 and M62 motorways. This is not only welcome news for motorists but could also create a number of new jobs.
What are your thoughts on the outcomes for employers?
