The Coalition’s last budget. What did it mean for Business and the economy?

IN: Business news

The last Budget of this parliament featured a few big ticket policy measures and a continuing commitment to deficit reduction.

undefinedA number of revenue raising measures were announced targeted largely on banks, tax evasion and aggressive tax planning. These were redistributed to individual taxpayers through another increase in the personal allowance from next year and new savings products. The main business giveaway was to companies engaged in North Sea oil and gas activity. The fall in the oil price since last summer has quickly fed through to delays and cancellations to new investment and exploration activity. A package of tax measures which will kick in during 2015/16 is intended to improve the competitiveness of North Sea oil and gas operators.

A number of the other new measures for business were announced, some of these follow on from recent HM Treasury consultations or lay the groundwork for reforms in future budgets. The headline measures announced in the Budget included improvements to the R&D tax credit, additional funding for UK Trade and Investment, new investment in innovation infrastructure and an earlier than planned introduction of some aspects of the compensation package for energy intensive sectors. Highlights include:

  1. R&D tax credit: The government announced a series of measures to increase SME uptake of the R&D tax credit, including voluntary advanced assurances for first-time claimants from autumn 2015; new guidance aimed specifically at smaller companies; and a publicity strategy to raise awareness. HMRC will publish a document in the summer setting out a roadmap for further improvements to the scheme over the next two years.

  2. UKTI Funding: There will be additional funding for UK Trade and Investment (UKTI) activities in China to ensure that opportunities for British businesses to trade with China are maximised. Funding was also announced for a series of trade missions focused on regional strengths.

  3. Innovation Infrastructure: A number of measures to support innovation were announced including £60 million for the new Energy Research Accelerator and £100 million for driverless car technology.

  4. Energy Intensive Compensation package: The Chancellor committed to bring forward the start of compensation payments to energy intensive industry (EII) to cover the cost of the small scale feed-in-tariffs. However, full compensation for the Renewables Obligation will not be introduced until April 2016.

The statement also signalled some other business tax changes in the pipeline. A comprehensive review of Business Rates is being undertaken by HM Treasury with input sought from business and representative organisations by June. The Chancellor also said that he would ensure that the level of the Annual Investment Allowance – temporarily set at £500,000 until the end of this year – would not return to £25,000 and a new level would be set out at the Autumn Statement. A number of other pre-announced measured will also be effective from April this year.  These include a further reduction in the headline rate of corporation tax to 20% and the abolition of employer NICs on under 21s basic rate earnings. 

The content published on this website is intended to provide information only. The reader should seek advice from experts on the subject matter and independently verify the accuracy and relevance of any information provided here before relying upon it or using it for any reason. You can view our terms and conditions here.

  • Business
  • SME
  • Article