The Chancellor claims that this Budget “will help those who aspire to work hard and get on, buy a home, start a business or save for retirement”, despite the financial crisis, inflation and the Eurozone troubles hampering recovery.
Increased capital spending plans should boost the economy, opportunities and jobs, with an extra £156bn for new road, rail and construction projects by 2020, plus a fivefold rise in government procurement from small firms. Government department spending will be reduced and public sector pay awards will be limited in 2015-16.
The focus is on growth with a reduction in the main rate of corporation tax to 20%, the lowest in the G20 countries. This will increase UK competitiveness and attract more businesses to operate here. But this is matched with a crackdown on tax avoidance and evasion, aimed at recouping £3bn unpaid taxes.
A key measure for businesses is the new employment allowance that gives a £2000 allowance towards employer National Insurance Contribution (NICs) bills from April 2014. This will reduce the cost of hiring staff, and, some 450,000 small firms will pay no employee NI. Osborne called this “the largest tax cut in the budget” and it should be a big boost for jobs with 98% of the allowance going to SMEs.
Other business-friendly measures include £1.6bn of funding for an industrial strategy; the creation of an Aerospace Technology Institute; funding for growth advice for small businesses; and, boosts to the Small Business Research Initiative.
Of equal importance is the adoption of the Heseltine Report’s recommendation on the creation of a Single Local Growth Fund. This “single competitive pot for local enterprise” will “give an opportunity for some radical new approaches to economic development” in cities and regions.
There is a significant initiative to help the housing market, a £5.4bn package of financial support and the launch of the Help to Buy scheme. This has potential benefits for house-buyers as well as boosting jobs and opportunities for the construction industry and the property sector.
Tax Breaks for Individuals - Fuel Duty, Child Care, SEIS
A range of measures directed to individuals also should impact positively on small businesses: the cancellation of fuel duty increases will benefit businesses’ transport costs; the introduction of a Tax-free Childcare Scheme will benefit individuals and businesses alike; and, an extension of the Capital Gains Relief Tax for investors funding businesses via the Seed Enterprise Investment Scheme (SEIS) should stimulate enterprise.
Reaction from the business community has generally been positive - the Budget seen as “small business friendly”. The Federation of Small Businesses (FSB) said that the Budget “opens the door for small firms to grow and create jobs. The Chancellor has pulled out all the stops with a wide-ranging package of measures to support small firms.”
To find out how the changes to corporation tax and national insurance could benefit your business or how you could take advantage of the SEIS, contact us on 0207 611 4848.