We all thought this was going to be a boring Budget but it wasn’t. Most people thought there was little to be announced and that everything had already been unveiled in the Autumn Statement. How wrong we were; there was plenty in this budget to cheer business owners.
George Osborne’s ambition to make the UK one of the best places to do business looks to be taking shape. He confirmed support is coming for industries like aerospace, film making, video gaming, pharma and life sciences, acknowledging that whilst having Britain as a financial centre is important, it’s not the be all and end all. Great, that’s what every business owner wants to hear. Struggling retailers will also benefit from the relaxing of trading rules on Sundays during the Olympics period.
Some large scale restructuring of the tax system looks to be underway with simplification and transparency being the emphasis. For instance, for very small businesses, being able to minimise red tape by simply having to pay a flat rate of tax based on their total sales is an interesting one.
Property tax avoidance is seeing a big shakeup with measures that take immediate effect from midnight tonight. A new 15 per cent rate of stamp duty will hit properties worth over £2 million bought through a company. This is supposedly going to generate an extra £500 million of tax income that can be offset against other rate cuts announced.
Personal allowances are increasing by £1,100 to £9,205 from April 2013 and according to Osborne, this means 24 million taxpayers who are earning less than £100,000 a year will be gaining; and 2 million will no longer be paying any taxes.
The very controversial cut to the higher rate of tax from 50 per cent to 45 per cent from 2013 was also confirmed after being splashed all over the news for the past few days. This is very good news for business owners because a large number do have incomes of £150,000 or more and this reduction will be a reward to them for all the hard work and risks they routinely take.
Further cuts to corporation tax will occur from next month when the main rate will be 24 per cent with a further two cuts planned by 2014. Is it right that ultimately, large corporations will be paying the same 20 per cent rates of tax as SMEs as the chancellor has suggested? We can understand his need to entice large companies to base themselves in Britain but what about additional rewards for the small business owners who often take the biggest risks?
Thankfully, the banks will not be ‘quids in’ from the CT rate drop. Although corporation tax is set to go down, the levy imposed on bank profits will be increasing.