In the Autumn statement last year, George Osborne believed it was his priority to rebuild Britain. He conceded that world growth forecasts had been revised, in part because of ongoing problems in the Eurozone. In the UK, the economy is expected to grow a little faster than originally predicted over the next two years, before slowing down somewhat towards the end of the decade.
Higher than expected tax revenues and lower interest payments on government debt handed the Chancellor more flexibility than many analysts expected.
Business, enterprise and employment in 2016/17
In a boost for SMEs, the Chancellor confirmed that the small business rate relief scheme would be extended for another year. Around 600,000 firms are expected to benefit as a result.
The apprenticeship levy is expected to raise £3billion a year. This will be set at 0.5 per cent of the payroll bill, although the Chancellor has claimed that only two per cent of employers will be eligible to pay.
Pushing ahead with his plans to devolve greater spending powers to local authorities, Mr Osborne said that 26 new or extended enterprise zones were being created around the country.
The Government will be doing away with uniform business rates and devolving power to set the rates to local councils. The local authorities will soon also be able to keep this revenue, rather than having to hand over money for ministers to reallocate.
The continuing economic recovery is expected to facilitate the creation of “more than a million” extra jobs during the next five years.
There is, however, likely to be concern that the Department for Business budget is to be slashed by 17 per cent.
A new, increased rate of stamp duty land tax is to be introduced for buy-to-let and second homes. This will be three per cent higher than the normal rate and takes effect from April 2016. The Chancellor said this will raise £1 billion by 2021, although there are concerns it will have a significant impact on the buy-to-let sector. There will also be a consultation on accelerating the stamp duty land tax on transactions from 30 days to 14.
From 2019, Mr Osborne announced that Capital Gains Tax (CGT) will need to be paid within 30 days of selling a residential property.
It was proposed that the rate of cooperation tax will continue at 20% from 1st April 2016.
Tax evasion, avoidance and aggressive tax planning
Mr Osborne pledged to tackle tax avoidance and announced that the Government would work to create one of the most “digitally advanced” tax systems on the planet.
By the end of this Parliament, everyone in the UK will have digital tax accounts. The reduction in administration costs form part of £1.9 billion savings for HMRC.
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