As predicted, the prevailing economic conditions constrained the chancellor in what he could realistically deliver in this budget, but there were a couple of headlines for Thursday’s papers as expected. Interesting that the Evening Standard stole a march and their budget day front page appeared on the Internet an hour before the chancellor’s speech to the house!
As anticipated, the final steps were taken in the governments long term goals of a 20% corporation tax rate for large businesses and a £10,000 personal allowance.
With a corporation tax rate of 20% from April 2015 (based on current rates) we will have the lowest tax rate in the G7 and the lowest rate in the G20 along with Turkey, Saudi Arabia and Russia. This gives us a good position against our key global competitors, and reinforces the government’s long term goal of making the UK a key player in the global economy. Britain is open for business.
The chancellor also didn’t disappoint on fuel duty, his favourite area of taxation it would appear, having featured positively in all of his budgets. With the scrapping of the proposed increase due in September, fuel duty has been frozen for three and a half years, the longest duty freeze for over 20 years. This is a relief for many small businesses around the country.
George surprised many with his announcement of a £2,000 Employment Allowance on employer’s NIC, which will benefit small business the most and I believe encourage jobs growth. Although no one foresaw this new policy, I’m glad that he has taken steps to tackle this tax on jobs with much more boldness than expected.
I thought maybe a small decrease or payment holiday would be announced. This was highest on my wish list for small businesses, so I’m pleased as I think many small businesses will be too.
VAT didn’t feature much in this budget, with just technical tweaks and increases to thresholds, which isn’t too surprising after the “omnishambles” of 2012 with the likes of the U-turn pasty tax! The VAT measures in the budget report all appear to relate to the 2012 budget. Looks like he sensibly stayed away from the VAT minefield, where a biscuit is not a biscuit when it’s a cake!
Anti-avoidance measures feature in this budget as widely expected, and as I predicted it is sufficiently balanced to show that the government is focused on dealing with this firmly without scaring away foreign investment.
I read five pages of measures in the ninety-four page Budget 2013 report, which when you consider that most other measures receive a few paragraphs, this demonstrates the resolve backing up the government rhetoric.
Capital Gains Tax
Capital Gains Tax (CGT) didn’t feature as expected, which I feel is a missed opportunity, as an increase in the higher band rate could be argued to be a fairer alternative to the mansion tax, only coming into force when a high value asset is sold. Maybe next time George.
Employee Share Schemes
Although, along with £50 million annual funding from 2014-15 to support employee ownership, a CGT exemption on qualifying disposals of a controlling interest in a business into an employee-owned structure from April 2014 does go some way to incentivise business owners with Employee Share Schemes.
It’s interesting that green technologies merely received a nod with Carbon Capture and Storage projects being taken forward to the detailed planning and design stage.
This may be because George is focused on the country’s uncomfortable exposure to the volatile global gas and oil markets, as he announces The Office for Unconventional Gas and Oil. Shale gas appears to be George’s shining knight in the battle against the gas breathing dragon pushing up gas prices.
Little room for manoeuvre
In conclusion, although there was very little room for manoeuvre, the chancellor had enough wiggle room to make some useful changes that should really benefit small businesses, particularly the scrapping of September’s fuel duty rise and the introduction of the Employment Allowance.
Some opportunities were not taken, but there’s the Autumn Statement 2013 to look forward to.
We’ll have to wait and see whether the supported lending for house buyers and SME loans actually make it to the coal face, banks have not been forthcoming to date, choosing to recapitalise or fund their debts with cheap Bank of England loans and bonds rather than pass them on through SME lending as was the intention.
All things considered it’s a fairly neutral budget, but may have reallocated enough elements to give small businesses a bit more of a chance of growth.
Mark Barrett, Cannon Moorcroft
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