A Budget for jobs and growth
On 16 March, the chancellor delivered a Budget designed to put the next generation first.
It’s our duty make sure the UK is fit for the future so, alongside work to fix the public finances and investing in education and infrastructure, we knew that we had to take bold action to support the private sector in this Budget.
It is as clear to me today as it has ever been, that it is the private sector that creates wealth – and it is our job as a government to remove the burdens that get in the way of businesses doing what they do best.
So in the Budget we permanently took 600,000 small businesses – a third of all businesses in the UK – out of paying business rates. To benefit all businesses we switched the “uprating” index from RPI to CPI. Together these changes will save all businesses £6.7bn over the next five years. We also announced a reduction in stamp duty for the vast majority of business premises, and targeted support for the UK’s vital oil and gas sector.
We want a tax landscape that is competitive and fair, and we want to give you more certainty for the long-term. It is those principles that have guided the reforms we have made in each of the last eight budgets, and it is why we also produced a Business Tax Road Map building on the Corporation Tax Road Map you welcomed in the last parliament.
Open for business
Without competitive taxes, businesses won’t want to come here, invest here, employ people here and do well. Nor will British businesses have the same stable footing to go out in the world and compete.
By reducing the headline corporation tax rate from 28 per cent to 20 per cent, and setting out plans for further reductions to 17 per cent, we have given the clear signal that Britain is open for business. Our support will allow businesses to reinvest more of their profits to achieve greater growth, employment and productivity.
The 26 per cent increase in business investment since 2010 stands testament to the path we have taken, and continue to take, to support businesses and to support the country. As does the 2.8 million more private sector jobs we have today compared with when we entered government.
Fairness in the tax system
A fair tax system is also critical. We want taxes to be low, but we want to make sure that everyone pays every penny that is due.
This is why the Budget included a raft of measures to level the playing field and support businesses. One of these changes introduces new powers for HMRC to clamp down on overseas online traders selling their goods to UK consumers and evading taxes. No honest tax-paying business should be undercut by a competitor just because they are based overseas.
And we’re changing the rules used by some multinationals to reduce their tax bills. This budget will see multinationals pay over £7.9bn more thanks to us closing down loopholes and ending tax avoidance. This will build on steps we have already taken, such as the Diverted Profits Tax, which is already changing the behaviour of large corporates, to ensure equitable treatment for all businesses.
Modern, simple taxes
We’re also making sure the system is as modern and as simple as possible, with a Business Tax Road Map to give businesses certainty over what they should expect from us in the coming years, and the clarity they need to invest with confidence.
The Office for Tax Simplification is to continue its sterling work on a new expanded, statutory footing. And we hope it will continue to provide helpful suggestions, as exemplified by the abolition of Class 2 National Insurance contributions.
And while we make the taxes you pay simpler, we also want to make paying them simpler. We have set HMRC a target to reduce the cost to business of complying with HMRC by £400m over the course of this parliament. This includes ensuring people can pay-as-they-go on their taxes from 2018, and that there is help and support. While people may never enjoy paying their taxes, we can at least make the process easier.
We have backed British businesses in many different ways and I am confident this Budget will make the UK an even better place to do business.