Class 2 National Insurance To Be Axed, Says Chancellor, George Osbourne.

So are you too ‘walking tall’ after last week’s budget?

Do you feel better off or more optimistic about the future of the economy in the medium to long term? Well, Chancellor George Osbourne certainly seems to think so. He claimed that “Britain is growing, creating jobs, and paying its way.” But how was the budget for you and your business? Were you pleased with the measures announced last week, or did you feel they didn’t go far enough? Well, here is Steven Glicher accountants’ summary of the measures the Chancellor has proposed for the next Parliament.

Economic growth.

  • The Office for Budget Responsibility (OBR) has forecasted the economic growth rate will be 2.5% for 2015.
  • The UK economy is forecasted to expand by 2.3% for the 2016, 2017 and 2018 and then 2.4% in 2019.
  • Inflation is expected to fall to just 0.2% in 2015.

Savings and pensions.

  • Mr Osborne believes the pensions’ lifetime allowance is unsustainable. So the rate will be cut from £1.25m to £1m. However draconian the measure might appear, it’s worth bearing in mind that this measure will only affect around 4% of people.
  • Savers will no longer be required to pay any tax on interest on the first £1,000 of savings, or £500 interest for higher-rate taxpayers.
  • A new Help to Buy ISA has been launched, with every £200 saved resulting in a government top-up of £50. However, the government top-up will only be paid retrospectively after completion of sale. Additional ISAs will be made more flexible, allowing savers to keep tax benefits when they take money out and put it in.

Tax issues.

  • The tax-free personal allowance, which will increase to £10,600 in April, 2015, will rise to £10,800 in 2016 and to £11,000 in 2017. The measure will result in tax cuts for over 27 million people. (The Chancellor’s aspiration is to eventually increase the personal allowance to £12,500 and the 40p rate to £50,000 during the course of the next Parliament.)
  • Class 2 National Insurance Contributions (NICs) are to be abolished. This measure should benefit over 5 million self-employed workers.
  • The higher-rate 40p tax threshold is to climb to £43,300 in 2017-18.
  • Tax loopholes within UK systems are to be closed, raising an estimated £3.1bn.
  • Voluntary advanced assurances are to be issued for SMEs making first R&D tax credits claims from autumn 2015.

Exporting.

  • The Chancellor has pledged to double the UK’s Trade and Investment’s resources for exporting to China.

Local initiatives.

  • The Chancellor has pledged to create a ‘Northern Powerhouse’, and has envisaged a comprehensive transport strategy for the North in the future.
  • Business rate receipts are to be devolved to Manchester. Cambridge looks likely to be the next city on the list to be given such devolved powers.
  • The Chancellor also announced the expansion of eight enterprise zones across the UK; with two new zones to be created in Blackpool and Plymouth.

Apprenticeships.

  • Apprentices will receive a 57p wage boost taking their earnings up to £3.30 an hour.
  • Mr Osborne unveiled the government’s new Apprenticeship Voucher. This will give businesses a greater say in the quality, value for money, and relevance of apprenticeship training.

Fuel duty.

  • The Fuel Duty escalator has been frozen once again, which is good news for motorists. Indeed, the Chancellor has claimed the measure could potentially result in further savings of “£10 a tank.”

If you would like further information about how the new budget measures might affect your business, then contact Steven Glicher accountants on 0161 485 8007 or email info@stevenglicher.co.uk

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