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Osborne vows to support digital sharing economy with tax breaks

The 2016 Budget promises to help SMEs and entrepreneurs through financial schemes and tax allowances

George Osborne promised in today’s Budget that the government would help the digital and sharing economy to grow by giving tax support to small businesses.

The chancellor said the government would help people who list their houses on sites such as Airbnb or sell products and services on the internet.

“We are going to help the new world of micro-entrepreneurs who sell services online or rent out their homes through the internet,” he said in his Budget speech.

“Our tax system should be helping these people, so I am introducing two new tax-free allowances, each worth £1,000 a year, for both trading and property income.”

Osborne also said he wanted to “address the great unfairness” felt by small businesses when competing against big companies on the internet.

Debbie Wosskow, chair of Sharing Economy UK, called the chancellor’s announcement a “colossal win for Britain”.

“We are the first in the world to introduce a sharing economy allowance that allows individiuals to earn up to £2,000 tax free,” she said. “This demonstrates that the UK truly is the home of the sharing economy.

“Consumers need to be able to use sharing economy platforms, such as Airbnb and TaskRabbit, to top up their income without the fear that they are breaking the rules.”

The Budget also included a £1bn package to help SMEs get loans through the British Business Bank and promised to cut corporation tax to 17%.

The chancellor also announced a new way of funding local government, which is likely to have a significant impact on IT investment in local councils.

“By the end of this parliament, 100% of local government resources will come from local government – raised locally, spent locally, invested locally,” said Osborne.

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Paul Bradbury, group business development director at Civica, said moving resources from central to local control was crucial for meeting the efficiencies demanded by government.

“However, it seems clear that the role of local government will continue to change, with the emphasis moving from organisations to places and from transactions to relationships,” he said.

“An essential element of this will be the transition to digital services, focusing on redesigned end-to-end services and outcome-led intervention, as well as becoming more commercially astute.”

The 2016 Budget is less focused on digital than was the chancellor’s 2015 autumn statement, when Osborne announced a £1.8bn investment in digital technology and transformation.

Tim Patrick-Smith, CIO of Gentronics, said he was surprised by the Budget’s “general lack of focus on the UK’s technology sector”.

“It is disappointing to see a lack of commitment to resolving the issue that many areas of the UK remain poorly served in terms of the communications and connectivity services that are the lifeblood of a modern economy, and suffer from poor internet access speeds and mobile network coverage as a result,” he said. 

Other budget measures included:

  • Looking at the “case and feasibility” for students to study maths until they are 18.
  • An investment into a new data science hub and a centre for excellence in economic measurement.
  • Providing up to £5m to develop options for an authoritative address register “that is open and freely available”.
  • A 5G strategy delivered by the government in 2017 on how the UK can become a world leader in 5G.
  • Grants of £14.5m to extend ultrafast broadband coverage in the south-west.
  • Establishing a new broadband investment fund.

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