The 2015 budget: what you need to know

The Chancellor has revealed his sixth, and final, budget of this Parliament- and declares that Britain is “walking tall”. 

George Osborne stood today to read the 2015 Budget, one which has been dubbed by Labour opposition “a budget that cannot be believed” in response.

In his statement, Osborne claimed that: “One-thousand more jobs have been created every single day. The evidence is plain to see that Britain is working again.” He also said there had been a job created every 10 minutes in the Midlands, and that 80% of new jobs created overall were full-time.

On employment in general, he said: “Youth unemployment is down, zero-hour contracts are regulated, the gender gap has never been smaller.”

The government also announced that it would abolish annual tax return “altogether”, which would be replaced by digital accounts. It hoped that by the end of the next Parliament, more than 50 million individuals and small businesses could see and manage tax affairs online.

A review of business rates was launched on Monday, but the 2015 budget revealed that a pilot scheme was announced to allow areas to retain 100% of any additional business rate growth, beyond expected forecasts. These areas included Cambridgeshire, Peterborough, Greater Manchester and Cheshire East. The pilots will begin in April 2015. Osborne inferred that this could also apply to other areas, saying: “My door is open for other areas who want to proceed as well.”

Despite this, the Labour Party hit back at the plans, saying that, in fact, there were more “zero-hour contracts than the populations of Glasgow, Leeds and Cardiff combined”. It also criticised the government for only including a number of areas in the new pilot business rates scheme.

Industry comment

Mike Holling, executive director of the Craft Bakers Association (CBA) said: “The CBA welcomes any incentives to help grow the economy and we are very interested to hear about the trial business rates scheme and hope that that is successful and rolled out further. Obviously come the election it all depends upon the outcome of that.”

On the National Insurance Contributions announcement, Helen Dickinson, British Retail Consortium Director General, said: “Young people are at the heart of the retail workforce – over 1 million of the 3 million people who work in retail are under 24 years old. The Chancellor’s abolition of NICs for under 21s lifts a significant burden from the industry and will allow retailers of all sizes to create new job opportunities for many more young people."

Summary: British Baker has fine-combed the document to ensure you stay savvy on plans that could impact on your bakery.

Business rates

  • Review launched to ensure fairer system
  • A pilot scheme announced to allow certain areas to retain 100% of any additional business rate growth beyond expected forecasts. Pilots will begin in April 2015

Employment

  • National minimum to increase by 3.1% for adults to £6.70
  • Apprentice rates to increase by 57p an hour to £3.30
  • Over 1m employers have benefited from the NICs Employment Allowance. Around 500,000 employers will have been taken out of Employer NICs altogether in 2014-15
  • The abolition of Employer NICs for under 21-year-olds from April 2015 will benefit employers of almost 1.5m young people

Tax

  • The main rate of corporation tax cut from 28% to 21%, and to 20% in April 2015
  • Personal allowance to increase to £10,600 from April 2015, this is worth £825 to a typical taxpayer
  • Tax on “diverted profits” to come into effect next month, which taxes multinational profits “artificially moved offshore”. The government plans to raise £3.1bn by cracking down on tax avoidance and questionable exploitation of tax loopholes.
  • Further support to farmers by increasing the period over which they can average their profits for income tax from two to five years from April 2016
  • Abolishment of annual tax as the tax system will go online

Growth

  • The UK grew 2.6% in 2014, faster than any other advanced economy, but lower than 3% predicted in December
  • 2.5% growth forecast in 2015, up from 2.4% predicted in December, followed by 2.3%, 2.3%, 2.3% and 2.4% in the next four years
  • Jobless rate to fall to 5.3% this year
  • Inflation projected to fall to 0.2% in 2015.

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