Budget 2013 – Key points for small businesses

The Chancellor delivered his 4th Budget speech at 12.30 today. Here is a summary of the key points announced, with particular reference to the changes which affect small businesses.

Economic Data

  • Economic growth forecast for 2013 has been downgraded from 1.2% to 0.6%.
  • Optimistic growth forecasts for future years – 1.8% next year, 2.3% in 2015 and 2.7% in 2016.
  • Borrowing is predicted to fall from £114bn in 2013 to £108bn next year, and £97bn in 2015.

 For Businesses

  • The main rate of Corporation Tax will be reduced to 20% from April 2015, aligning it with the small profits’ rate which was cut to 20% in April 2011.
  • A new ‘Employment Allowance’ will take up to £2,000 off the employers’ NICs for all firms from April 2014.
  • Bank Levy will be increased to offset the Corporation Tax cut.
  • A wide range of anti-avoidance measures are to be introduced, include a General Anti-Abuse Rule (GAAR), and disclosure agreements with offshore havens such as the Isle of Man and the Channel Islands. These measures have been announced in advance.
  • The amount of Government procurement from smaller firms will increase five-fold.
  • SEIS reinvestment relief will be extended into the 2013/14 tax year.
  • Stamp Duty will no longer be payable on transactions in ‘growth markets’, such as the AIM.
  • A new  Income Tax scheme is to be introduced in the 2013/14 tax year for small unincorporated businesses, which will allow eligible businesses to calculate profits on a cash basis.
  • The Small Business Rate Relief Scheme has been extended for a further 12 months, until April 2014.

For Individuals

  • Personal allowance will be raised to £10,000 from April 2014.
  • The proposed September fuel duty increase has been scrapped.
  • Families will receive up to £1,200 per year in help towards childcare costs – but this measure only takes effect from 2015 (election year).
  • Flat rate pension of £144 per week to be brought forward to 2016.
  • Public sector pay rises have been restricted to a mere 1% until 2015/16.
  • ‘Help to Buy’ scheme will provide £3.5bn in loans to help individuals buy their first homes. This means the Government will effectively guarantee £130bn in new mortgage lending, however it is not clear how applications will be policed to ensure that lending help only goes to first time buyers and people ‘trading up’, rather than the better off simply taking advantage of interest-free capital.
  • Beer duty is to be reduced by 1p, counterbalanced by rises in duty on wine and tobacco.

You can access the ‘official’ HM Treasury Budget 2013 channel here, and the full Budget documentation here.

Reaction to the Chancellor’s speech has been positive overall with business organisations.

The CBI’s Director-General, John Cridland, said: “Small and medium-sized businesses will be particularly encouraged that there was money available for the Chancellor to cut the jobs tax through a new employment allowance. We also need to remember the impact of business rates on the hard-pressed high street.”

The FSB’s Chairman, John Walker, said: “The housing initiative will help reinvigorate the construction sector in which many of our members operate. National Insurance cut goes beyond what we were asking for and we are pleased to see the scrapping of the 3p fuel duty due in September.”

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