Budget 2016 – My review

So once again it’s Budget time, and once again I’ve been a huge geek and read the Budget report (https://www.gov.uk/government/publications/budget-2016-documents). Here’s some highlights, and stuff you may have missed:

  • Firstly, cuts to Corporation Tax to businesses. OSBOURNE YOU IDIOT!!!  (Sorry, had to get that out of my system). Saying that though, this doesn’t kick in until 2019 – 2020 where we may be in a different world by then. Compared to other decisions Osbourne has made today this actually has no impact on the Budget for the next 3 years.
  • Sugar tax on sugary drinks (phew, not chocolate bars), with money going to school sports programmes.
  • ISAs – goes up to £20,000, new Lifetime ISA of £4,000 per year with a 25% contribution from George Osbourne of whatever you save for under 40’s. Plus a new Help to Save for those on Universal Credit (remember that!), save £50 per month, get £25 from George.
  • The income tax threshold goes up to £11,000 this year, and £11,500 next, with the aim of it getting to £12,500 by 2020. 40% threshold goes up to £45,000 next year, with the aim of £50,000 by 2020.
  • Money from LIBOR fines going to children’s hospitals including Manchester. Plus other banking fine money to establish an air ambulance service in Northern Ireland.
  • Cuts to business rates (at last!), with smaller properties exempt from rates entirely. That plan for my own Do Jang is more feasible now…
  • Also abolishing class 2 National Insurance on the self employed, with reform on Class 4 NICs.
  • While businesses may like Corporation Tax relief, plans are in place to limit how much Tax Relief they can use. So when a business makes a loss, they can claim a reduction of tax payments when they make a profit again to take into account their prior losses; this is to be capped!
  •  …especially for banks, who will have ALL of their pre-2015 losses heavily capped for tax relief.

  • New Stamp Duty reform and tax for businesses, to raise at least £300 million this year alone!
  • No mention of the NHS. At all. None! Zip. Zilch. Nada. No cuts, but no extra funding either.
  • Rollies! Tax on rolling tobacco, traditionally lower than cigarettes, will be brought up to the same level as of 6pm tonight!
  • £20 million to be invested in the Northern Powerhouse Schools strategy, to improve schooling education Oop Naarf.
  • Yay to High Speed 3 and Crossrail 2, with investment also in a new tunnel under the Pennines.
  • Money spent in Norfolk! On a new research and development centre.
  • From the report: “a reduction in the number of assessment points awarded for needing to use an aid or appliance to carry out two of the ‘daily living’ activities assessed. This will take effect for new cases and re-assessments from January 2017. ”

  • Know anyone who invoices for work as a Business instead of being paid a wage? Celebrities did this as part of a tax loophole. Yeah, that’s closed now.

I have to give this Budget some credit, insofar that I’ve been moaning about lack of movement on Business Rates and Class 2 / 4 NIs for ages. The Corporation Tax will make a lot of noise for the right reasons, but I think misses a broader point. There’s NOTHING in here about the NHS, and a handful of paragraphs about disabled people, welfare reform, etc. Meanwhile many pages on business tax reform.

For me, I am a simple man (!), reform business tax, fair enough, especially as I’ve been calling for Business Rate reform (from a selfish standpoint) for some time. Some money from banking fines have also gone to very worthwhile causes. Some of the business tax changes successfully generates income for the Government; if this had been channelled into a new deal for the NHS, top-ups to disabled benefits and more money for public services many more would likely genuinely believe we were “all in this together”.

– Michael

airport bank board business
Photo by Pixabay on Pexels.com

TL;DR – Don’t get hung up on Corporation Tax going down, it doesn’t do much to the Budget yet. Sugar tax, meh, you’ll get over it. If you want to get angry, ask why disabled people and the NHS can’t benefit from some of the changes to Business taxes.

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