Summer Budget: what you need to know

Chancellor George Osborne confirmed the planned relaxation of Sunday trading hours and a national living wage in the Summer Budget.

The Budget, which is the first since the Conservative Party was voted into government at the May election, saw corporation tax dropped from 20% to 19% in 2017 and 18% in 2020. This showed “Britain is open for business”, Osborne told the House of Commons.

He confirmed plans to review Sunday trading hours and give power to local councils. These plans have been slammed by union GMB, which warned that any changes to Sunday trading laws will impact on workers in the supply chain. 

He also unveiled a National Living Wage plan that will see salaries hit £9.00 per hour by 2020 for over-25s. The Low Pay Commission will advise on the rates, which will start at £7.20 in April 2016. The government said this would cost only 1% of corporate profits.

The annual investment allowance, which allows companies to write off capital spending against tax on equipment, will be put at £200,000 every year. This was set to drop to £25,000 at the end of the year.

There were more tax breaks for employees as the tax-free personal allowance was increased to £11,000 and the 40% tax rate was increased from £42,500 to £43,000.

The Chancellor also increased the national insurance allowance to £3,000 from 2016 to help small firms.

On apprenticeships, Osborne promised a “radical and frankly long overdue approach”, with a new apprenticeship levy put on all large firms.

Industry reaction

The Federation of Small Businesses said the budget 'is a potentially challenging, mixed bag for business'.

John Allan, national chairman, FSB, said: “There was further support to reduce corporation tax, fix the annual investment allowance and boost regional growth, where investment in roads will be particularly well received. We agree with the focus on productivity but need to see the details to raise skills through the apprenticeship levy on large firms. Planning reforms are also critical to raising productivity and again we look forward to seeing the proposals on Friday.

"However, even though offset by a welcome increase in the employment allowance, some will find the new National Living Wage challenging. Changes to the treatment of dividends will also affect many of our members.”

BRC director general, Helen Dickinson, said: “There are some welcome changes in today’s budget that will help retailers support job creation and drive growth. However, without knowing the detail of the fundamental reform of business rates the gains from today’s budget for retailers and their customers are not clear.

"The retail industry is not a minimum wage employer. Median wages for hourly paid workers currently stand at £7.30 per hour – this is already above the rate of the new National Living Wage announced today. Retailers will look closely at the new proposals and assess the impact alongside the positive tax change announced by the Chancellor today. 

“We continue to believe that the real key to raising more people out of low pay will rest in increasing productivity. This will be more effective than playing pass the parcel around the economy with the financial burden of increasing people’s incomes. It is crucial that Friday’s productivity plan addresses the issues faced by retail businesses and creates a sustainable route to higher incomes.”

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