In a boost for business, further cuts were confirmed in corporation tax – which is set to be reduced to 19 per cent in 2017 and 18 per cent in 2020. The Chancellor is optimistic this will increase employment.
There will, however, also be significant changes to dividend taxation from April next year, which will impact many owner-managed businesses, and the effective tax rates on extracting profits.
One of the biggest surprises of the Budget was the introduction of a National Living Wage. This will apply to over-25s and will start at £7.20 next April, rising to £9 by 2020. Mr Osborne said that 2.5million people would see a pay rise as a result of the changes.
There was less good news for public sector workers, with pay awards set to be capped at one per cent a year for the next four years.
It was announced that the annual investment allowance – which it was feared would fall to £25,000 – will in actual fact rise to a permanent level of £200,000 a year from 1 January 2016. Mr Osborne said that this would be a big help for small and medium-sized businesses.
The Chancellor also spoke about the importance of apprenticeships and said that while some firms were doing an excellent job training employees, others were falling short of what was expected. A new apprenticeship levy will be imposed on all large firms, but Mr Osborne promised that those who take apprentices on will get far more back in terms of funding than they put in.
As was rumoured earlier this week, Mr Osborne confirmed that local councils and elected mayors would be handed new powers to set trading hours on Sundays. This policy, which will be put out to consultation, has attracted some criticism, but the Chancellor argued that local people should have the right to decide if the shops open for longer.
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