GEORGE Osborne included welcome tax cuts for businesses in his Budget with changes that will mean an increase in wages bills for many.

Amid familiar claims about wanting to encourage the UK's international competitiveness, the Chancellor announced unexpected reductions in the Corporation Tax rate.

The rate, which the Chancellor said was already one of the lowest among the leading economies, will fall to 19 per cent in 2017, then to 18 per cent in 2020, from 20 per cent currently.

This will bring benefits to companies of all sizes, including oil and gas firms, so long as they are making profits.

The Chancellor was also credited with encouraging firms to spend on the kind of plant and machinery that will boost their productivity. He said the Annual Investment Allowance under which firms can set spending on qualifying assets against their tax bills will be fixed at £200,000 from January 1 and made permanent.

Worth £500,000 currently, the allowance was due to fall to £25,000 in January.

The cut in the Corporation Tax rate was described as a welcome surprise by the Confederation of British Industry.

Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said: " Having an economy with a low corporate tax rate is important not just for existing businesses but as a component in the package we offer to those in other countries looking to invest in Scotland and the UK."

Regarding the extending of the Annual Investment Allowance, Ms Cameron said: "This is vital in order to incentivise business investment and to cement growth in our economy and in productivity."

However, she said Mr Osborne had missed a clear opportunity to secure future growth opportunities by failing to reduce VAT for Scotland's tourism businesses

Mr Osborne caused some confusion with the announcement the Government will introduce a National Living Wage. This will require employers to pay £7.20 per hour to all staff aged 25 and over from April, rising to £9 per hour in 2020.

With the Minimum Wage £6.50 currently, the introduction of the Living Wage will result in increased wages bills and related employers National Insurance costs for many firms.

Mr Osborne claimed the effects will be offset by the cuts in the Corporation Tax rate

Small firms are also to benefit from a 50 per cent increase in the relief they get from employers' National Insurance contributions. The current annual employment allowance of £2,000 is to be increased to £3,000 from April 2016. This will mean firms could employ four people on the Living Wage without having to pay any employers' NI, reckons Mr Osborne.

The Chancellor included another populist touch by moving to penalise big firms that benefit from others' efforts to ensure the country has enough skilled workers through their apprenticeship programmes.

He said the Government will impose an apprenticeship levy on all large UK firms, which will fund three million new, high quality apprenticeships this Parliament.

However, it was unclear what the implications would be for Scotland. The Scottish Government supports apprenticeships.

The Federation of Small Businesses in Scotland said it could be difficult for some firms to figure out if they would be winners overall.

"Many small employers will be examining their books over the weeks to come to understand what the changes to business taxation and minimum wages will mean to their operations," said Andy Willox, the FSB's Scottish policy convenor .

But Mr Willox provided a clear welcome for the Chancellor's decision to maintain the freeze on Fuel Duty.

"Small firms, especially those in rural areas are disproportionately hit by the cost of fuels. Continuing to freeze fuel duty will be welcomed by small firm still struggling with the cost of fuel at the pump."