The first Conservative Budget for 18 years was bound to be a major departure from earlier coalition Budgets. Bill Dodwell, head of tax policy at Deloitte, considers the winners and losers, and cost implications of key tax changes
Budget rumours warned us to expect a major Budget – and so it proved. One hour and six minutes later, Chancellor George Osborne had announced net tax rises worth nearly £5.8bn by 2020-21. He also announced £800m in new funding for HMRC – about £225m annually.
The headline measure is the increase in the national minimum wage to £7.20 per hour from £6.50 currently (and its renaming to national living wage). This will then increase to 60% of median earnings by 2020.
Business receives support in the form of an increase in the employment allowance to £3,000 from 2016 and, from 2017, a cut in corporation tax to 19%, followed by a cut to 18% from 2020.
Business investment also receives support in the form of a permanent £200,000 annual investment allowance (immediate tax relief for business assets) once the current £500,000 allowance finishes at the end of 2015. That is a welcome move, particularly setting it as permanent feature and it will support the investment case generally.
