Osborne’s mixed bag for business
CHANCELLOR George Osborne’s summer budget was arguably the most ambitious of the seven he has delivered, as he shocked many with his creation of a new national living wage for people over the age of 25.
The new living wage, initially set at 70p above the present national minimum rate of £6.50 but rising to more than £9 an hour by 2020, will give 2.7 million workers a direct pay rise, with a further 3.25 million likely to get knock-on rises.
There were fears though that this may hit small businesses in the leisure and retail sectors.
John Allan, national chairman of the Federation of Small Businesses said:
“It will pose significant challenges for many small firms, particularly
those in the hospitality, retail and social care sectors.”
In a Budget decribed as “doubled-edged” by the business group CBI, the statement contained, in the words of North West tax accountant Paul Hyland of DSG in Liverpool a “sting in the tail” for entrepeneurs and business owners as tax on company dividends was increased.
Elsewhere, Osborne used crackdowns on buy-to-let landlords and tax rises for insurance premiums and luxury cars to argue that the burden was being shouldered fairly.
It wasn’t all gloom for buisnesses as corporation tax was cut by 1p and more generous tax breaks for investment and national insurance exemptions for smaller companies were announced.
The regional business view was mixed too.
Mike Perls, chair of the IoD in the North West said: “From a regional viewpoint, the devolvement of further powers to the 10 councils of Greater Manchester combined with greater connectivity for the North through Oyster-style integrated ticketing and plans to transform east-west rail and road connections via the new £30m statutory body ‘Transport for the North’ will no doubt drive productivity and strengthen the Northern economy.
“Nationally, cuts to corporation tax and an increase in the employment allowance are welcome news for business, however, the IoD is extremely disappointed that calls to simplify the UK tax system have been overlooked with the already complex inheritance and pensions tax systems further complicated.
“More could also have been done for small to medium businesses looking to invest for the future with the Annual Investment Allowance fixed for five years but at far too low a rate of £200,000.”
The announcement on AIA was welcomed by Mike Hartley, managing director of Blackburn-based Praetura Asset Finance.
He said: “It really was a Budget for business, with the chancellor giving a nod to the enormous contributions make by UK SMEs in helping get the country out of the red and into the black.
“AIA has changed four times since 2008, but has fast become a major incentive in encouraging firms to utilise asset finance to purchase new equipment and take advantage of the 100% tax relief. And the fact that alternative lending has risen fivefold in the last decade, is testament to SMEs increased appetite for growth.”
