This year’s budget was announced by Chancellor of the Exchequer George Osborne today.
Alongside national headline policies of lowering national debt, introducing a new pound coin and increasing GDP, the budget will affect Hackney businesses in several ways.
Nationally, he has said he expects unemployment to fall to 5.3 per cent, as the number of benefit claimants falls to its lowest since 1975.
He also announced the government’s plans to increase the national minimum wage from £6.50 to £8 by the end of the decade.
Promising a budget that “backs the self-employed and small businesses”, Osborne announced the annual tax form will be scrapped and a lower business tax introduced, moves which are sure to help business owners in Hackney.
He also announced more funding for local councils to address London’s housing shortage.
Here are the key areas in which the 2015 budget will affect Hackney.
1. “Death of the annual tax return”
Osborne has pledged to abolish the dreaded annual tax form, which he described as “a revolutionary simplification of tax collection”.
The move is likely to benefit Hackney residents who are self-employed or own small businesses.
Jack Tinley, Conservative Candidate for Hackney South and Shoreditch, told the Hackney Post: “With businesses on the High Street obviously under increasing pressure from internet giants, it’s great that we can start to look at ways we can support local businesses and give them a leg up.”
Self employed people and sole traders will submit their taxes through an online form on their computers, iPads and smartphones, in a similar manner to online banking.
“We believe people should be working for themselves, not for the taxman,” the Chancellor said. “Tax doesn’t have to be taxing.”
2. Lower taxes for business
In a move that is sure to benefit businesses headquartered in Hackney, Osborne announced that within two weeks the government will cut corporation tax to 20 per cent, down from 28 per cent in 2010, for businesses with profits above £300,000.
The coalition hopes the lower tax will increase investment and the demand for labour, which will have the effect of raising wages and increasing consumption.
Osborne also promised a “far-reaching” review of business rates.
Mr. Tinley said, “If you look at the huge progress the borough has made over the last few years, it’s really thanks to the growth of small local businesses. That’s led to the creation of so many more jobs, more security, growth of the local economy. Lowered business tax can only be good for that.”
3. London’s housing shortage
Seeking to address the “acute housing shortage in the capital”, Osborne promised more funding for the London Land Commission.
The budget states £1m will be given to the London Land Commission to create a database of public sector and brownfield land across London.
It’s also likely the budget will provide an incentive for councils to release more land to be built on or to turn derelict brownfield sites into “housing zones”.
In response, Meg Hillier, Labour and Co-operative MP for Hackney South and Shoreditch said: “That was all very well. But it’s a laugh when you think in Hackney when we’ve got St Leonard’s Hospital being given away to the NHS Property Company. Then you have the fire station site sold for £28m, that might be for housing, but it’s most likely luxury flats.
“They talk about investment in housing but it’s not for people who need family housing at affordable rates. It’s the cheap headline, but it’s not delivering for my constituents.
“We want to see more affordable homes built,” she said. “Osborne didn’t mention more affordable homes. They talk about more housing, it’s just more housing at market rates, that’s not really helpful to the people of Hackney.”
4. Raising minimum wage
While an increase in minimum wage to £8 is likely to benefit many employees in Hackney, it could have a negative effect on Hackney businesses.
As many small businesses face new pension costs in the coming months, many feel now is not the time to raise the national minimum wage.
Despite this, Mr. Tinley said: “It’s fantastic news for Hackney. It helps hard working people on lower incomes by putting more money in their pockets and rewarding them for what they do.”
5. Reducing alcohol tax duty
Osborne announced a tax cut of another penny off the pint, a reduction of cider duty by two per cent and a similar two per cent cut on the duty of Scotch whiskey and other spirits. The duty on wine will be frozen.
“More pubs saved, jobs created, families supported,” Osborne said, “and a penny off a pint for the third year in a row.”
