The Budget and your business

While much of Chancellor George Osborne’s Budget had been foreshadowed in the press, there were still some unexpected moves. Here’s our summary of the key points for businesses.

While much of Chancellor George Osborne’s Budget had been foreshadowed in the press, there were still some unexpected moves. Here’s our summary of the key points for businesses.

The headline announcements

Corporation tax is to be reduced by 2 per cent, not the 1 per cent previously announced. The Chancellor will make changes to the bank levy to ensure that banks do not benefit from this

Fuel duty is to be cut by 1p per litre, effective at 6pm tonight, while the rise in duty to account for inflation that was due this year will be delayed until 2012. A ‘fair fuel stabiliser’ will also be introduced

Cutting red tape
Business regulations are to be simplified, saving businesses £350 million according to the Chancellor. Targets for simplification include the complex ‘dual discrimination’ rules in the Equality Act and health and safety regulation

Small businesses (those with under ten staff) and ‘genuine start-ups’ will be exempt from new domestic regulation for the next three years

Tax regulation is to be simplified, with 43 ‘complex reliefs’ abolished and 100 pages removed from the tax code

Support for enterprise
A total of 21 new enterprise zones are to be created. The first ten will be in urban areas ‘with the highest need and the highest potential’, including Birmingham, Derbyshire and Nottinghamshire, and Manchester

The Enterprise Investment Scheme is to be made significantly more generous, with an uplift in tax relief from 20 to 30 per cent, a doubling in the amount any individual can invest through the scheme and an increase of 400 per cent in the limit of how much can be invested in any one company

Venture capital trusts (VCTs) will also benefit from a widening of the qualifying criteria, with the maximum size of companies eligible for investment increasing from 50 to 250 employees, and gross assets from £7 million to £15 million (these changes also apply to EIS)

Entrepreneurs’ relief is to be doubled from £5 million to £10 million, remaining a lifetime threshold

The national insurance holiday for small companies outside London and the South East is to be extended to October 2012

Green measures
A ‘floor’ will be introduced for carbon prices to support the carbon market, which will begin at £16 per ton of carbon dioxide in 2013

The government’s green investment bank is to start operating one year earlier than planned in 2012 and its resources will be ‘trebled’ to £3 billion

The construction industry will be supported with a package of £250 million to support first-time buyers via a new shared equity scheme

Personal tax

The Chancellor wants to align income tax and national insurance, ‘two different systems’ creating ‘totally unnecessary costs and complexities for employers’, but this won’t happen for several years as detailed consultation will be necessary first

Non-doms, who currently pay a levy of £30,000 in order to retain their exemption from UK tax after living in the country for seven years, will now be charged £50,000 after living here for 12 years

Public finances
Government borrowing this year will fall ‘below target’ at £146 billion, dropping to £122 billion in the following year and to £29 billion by 2015/16. National debt as a percentage of GDP will be 60 per cent this year and peak at 71 per cent before falling to 69 per cent at the end of the period

The annual growth forecast has been revised downwards to 1.7 per cent for this year by the Office for Budget Responsibility. That’s attributed to weaker than expected growth in the final quarter of last year, a rise in commodity prices, and higher-than-expected UK inflation. Growth will increase to 2.5 per cent next year, then to 2.9 per cent in 2013 and 2014 and 2.8 per cent in 2015