The headline announcement in this years Budget was that 450,000 SMEs will no longer be required to pay employer National Insurance Contributions (NICs), with the first £2,000 being taken off employers’ NI bills from April 2014.
In what was labelled as a Budget for an “Aspiration Nation”, George Osborne also laid out other measures to help businesses including a cut of 1% in the top rate of Corporation Tax to 20% by April 2015, while Stamp Duty is also to be scrapped on shares traded on growth markets like AIM.
George Osborne also committed to extending the Capital Gains Tax holiday for the Seed Enterprise Investment Scheme meaning any investors making capital gains in 2013-14 will receive a 50% CGT relief when they reinvest those gains into seed companies in either 2013-14 or 2014-15.
Other significant business announcements included tax relief for social enterprises, further tax avoidance and evasion measures (including the introduction of a General Anti-Abuse Rule in 2014) and government procurement for small firms to increase fivefold.
For the individual, the biggest announcement in the Budget was the income tax rate threshold being raised to £10,000 in 2014 – a year earlier than planned.
Further help for families include tax relief worth £1,200 on childcare vouchers up to £6,000 per child from 2015, while Mr Osborne also introduced a “Help-to-Buy” scheme, including interest-free loans of up to 20% of the value of new-build properties, and bank guarantees underpinning £130 billion of new mortgage lending for three years from 2014 in an effort to help people move and invigorate the housing market.
The headline announcements came against a backdrop of a downgrade in the economy – with the growth forecast cut to 0.6% in 2013, from a predicted 1.2% in December.
While this Budget is short on a great host of tax cuts for small businesses, we are pleased that the Chancellor has announced measures to take 450,000 small businesses out of paying employer NICs.
This will reduce a significant burden on small businesses and allow them to take on new staff and invest in their companies.
The cutting of Stamp Duty on shares traded on AIM will also encourage significant investment in SMEs, as will the extension of the CGT holiday for individuals investing via the Seed EIS.
However as with any Budget we advise that people take a closer look at all the announcements to see how it affects them.
For more information please do not hesitate to contact Stuart Hinnigan at the office.
Author: Stuart Hinnigan FCA CTA
Stuart’s career in accountancy began when he joined Preston based Moore and Smalley in 1994 following his graduation from Lancaster University. He qualified as a Chartered Accountant in 1997 and then chose to specialise in...
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