Budget Positives for Small Businesses

After the mixed reaction to George Osborne’s Budget 2013 yesterday, there were a number of items from the Chancellor of the Exchequer’s budget that can be seen as positives for small businesses:

From April 2014 businesses will save £2,000 on National Insurance Contributions (NICs). That means that an estimated 450,000 small businesses, or approximately one third of all employers, will pay no employer NICs from April next year.

The main rate of Corporation Tax has been reduced to 20% from April 2015 giving the UK the world’s most competitive business tax rates.

This brings the corporate tax rate in line with the small profits rate and simplifies the tax system, making the tax rate the same for businesses no matter their size.

With the headline rate coming down in 2 years time, there was no immediate benefit for small businesses.

The planned 3p fuel duty rise for September 2013 was scrapped, which is good new for all motorists but in particular for businesses where road transport is the lifeblood of their business.

A new scheme for house buyers, the help-to-buy scheme, was launched and will see £3.5 billion of capital spending over the next three years. This is expected to have a beneficial effect on the house building sector.

From 2015 there is expected to be a boost in infrastructure spending, with George Osborne announcing that, two years from now, £3 billion a year will be spent on various infrastructure projects.

Some other announcements in the budget that may be of benefit to UK SMEs include:

  • Capital gains tax relief for employees who buy businesses from their employers
  • Capital gains tax holiday for investment in the Seed Enterprise Investment Scheme (SEIS) extended
  • Doubling of the size of the loans that employers can offer tax-free to pay for items such as season tickets, to £10,000
  • Government procurement from small firms to increase fivefold
  • R&D tax credits increased to 10%
  • New tax reliefs for creative industries including animation, TV and video games
  • Tax relief for investment in social enterprises
  • A green light for Doug Richards’ proposed overhaul of apprenticeship schemes
  • The flat-rate pension scheme to be brought forward to 2016
  • Enterprise funding to be devolved to Local Enterprise Partnerships (LEPs), as recommended in Lord Heseltine’s Review of Competitiveness.

There was no reduction in the business rates despite calls from business groups and little information on how to stimulate lending from the banking system to small businesses.

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