The Budget 2016: What happens every March and why does it matter?
Unless you’ve been living on the other side of the world, if you’re active in the small business space then the announcement George Osborne is set to make on 16 March is probably on your radar.
Although the announcement is widely followed, its significance, history and relevance are less widely appreciated so Business Advice has prepared this handy guide to budget speeches in order to answer your burning questions, as well as those you might never had thought of asking.
What’s actually going to happen on 16 March?
After prime minister’s questions at midday, chancellor George Osborne will take to the dispatch box to set out outline the UK’s financial position and then set the tax changes he proposes to make in order to balance the government’s books.
What’s the deal with the red briefcase?
The ministerial red box which the chancellor carries his Budget paperwork in is actually one of the many scarlet briefcases used every day within parliament to store important paperwork in. The specially designed cases have a lead lining to ensure they sink if thrown overboard if the ship they are being carried on is attacked and, more importantly in the 21st century, are also bomb-proof.
Chancellors have traditionally carried their Budget documents in a red briefcase from the 1860s, but Gordon Brown plumped for the modern version of the case used every day. Osborne has used both traditional and new red boxes in the past.
Why do we have the Budget anyway?
Income tax and, importantly for small business owners, corporation tax, have never become permanent aspects of UK legislation but instead expire on 5 April every year, so parliament has to vote each year to agree to extend them and this provides an opportunity for the chancellor to propose any changes they want to make.
Given how big an impact these two direct taxes have on the government’s financial position, any changes the chancellor makes to them will inevitably impact on the viability of changes to other taxes and exemptions such as Entrepreneurs? Relief and Insurance Premium Tax.
it’s for this reason that the government’s taxation plans are lumped together and announced in the run-up to April.
Isnt it sort of similar to the Autumn Statement?
Traditionally, the Autumn Statement has focused on spending while the Budget has been focused on taxation. But with the two so closely linked, some overlap is inevitable, and Osborne’s announcements have mixed the two more than some of his predecessors did.
Is it true that Osborne’s allowed to drink while he’s delivering it?
Traditionally, the Budget is the only time of the year when alcohol is allowed in the House of Commons. William Gladstone famously drank sherry with a beaten egg, while Nigel Lawson went for wine mixed with water and Ken Clarke drank Scotch. But Gordon Brown started a trend for mineral water in 1997 and in recent years it has been one of the only ways Osborne has emulated his Labour predecessors.
Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics as well as running a tutoring company.
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