July Budget 2015: George Osborne cuts corporation tax and bank levy as he tells firms “Britain is open for business”
George Osborne has made his case for keeping large corporations in the UK after he slashed corporation tax and the bank levy during the first all-Conservative Budget speech since 1996.
In a Budget designed to "show the world the UK is open for business", the chancellor cut corporation tax to 18 per cent, as well as promising to "gradually reduce" the bank levy over the next six years.
Under the new rules, an eight per cent "bank surcharge" will be put on profits instead.
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He also hiked the minimum wage to £9 an hour – 60 per cent of median earnings – by 2020.
"Britain deserves a payrise," he said.
Businesses were largely positive about the move, said Simon Walker, director general at the Institute of Directors.
"We should not understate the boldness of this move, and many businesses will have been taken by surprise, but the IoD accepts that after several years of slow wage rises, now is the time for companies to increase pay."
Meanwhile, national insurance contributions were cut to £3,000 for small firms.
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Elsewhere in the speech, the chancellor said the Office for Budget Responsibility had cut its forecast for UK growth in 2015 to 2.4 per cent, from 2.5 per cent. It should hit 2.4 per cent in 2016, up from the original forecast of 2.3 per cent.
Budget deficit will fall to 2.2 per cent in 2016-17, dropping to 1.2 per cent the year after that. By 2019, the UK will reach a budget surplus of 0.45 per cent. He confirmed previously announced plans to make running a budget surplus a legal mandate for future governments.
He also confirmed plans to reduce tax evasion by giving HM Revenue & Customs £750m to pursue tax evaders, raising the sum it can raise by £7.2bn.
There will be "nowhere to hide" for those using tax avoidance schemes, he said.
However, he also abolished permanent non-dom tax status, and inheritable tax status, from April 2017. The move is likely to raise £1.5bn, he said.
"Anyone resident in the UK for more than 15 or 20 years should pay British taxes," he said.