Today’s Budget announcement has important practical implications for business owners.
With the British economy in a dangerous state, the government was under pressure to deliver a programme for growth.
Here is our quick guide to help you assess what this Budget mean for you:
• The Office for Budget Responsibility (OBR) expects the British economy to avoid recession. It now expects growth of 0.8 per cent during 2012, 2 per cent in 2013, and 2.7 per cent in 2014, and 3 per cent in 2015 and 2016.
• The OBR still expects unemployment to peak at 8.7 per cent this year, with 1 million more jobs created during the next five years.
• The OBR expects inflation to fall to 1.9 per cent in 2013.
• The OBR expects the eurozone to contract by 0.3 per cent in the next two years.
• The headline rate of corporation tax will fall to 24 per cent from April, and then to 22 per cent from 2014.
• The smallest firms will get a simplified tax reporting system, in line with an EU directive.
• The government will “remove loopholes and exemptions” on VAT – meaning that more products will be subject to the tax.
• Tax incentives will be offered to the video game and filmmaking industries.
• The income tax threshold will rise to £9,205 from April 2013. The threshold is already scheduled to rise to £8,105 from next month.
• The top rate of income tax will be cut to 45 pence from 50 pence, from April next year.
• Taxpayers will receive a personal tax statement.
• There will be a new cap on income tax relief for those claiming more than £50,000 in reliefs.
Lending and finance
• Prior to the Budget the government announced a new National Loan Guarantee Scheme that it says will help small firms secure cheap credit. Loans will be available under the scheme at 1 per cent cheaper than those outside it.
• The Finance Partnership and Enterprise Finance Guarantee will be expanded.
• ‘Enterprise loans’ will be provided to young entrepreneurs on a similar basis to student loans.
• Private firms will be asked to invest in infrastructure, with parts of the road network potentially being privatised.
• Network Rail will improve rail lines in the north of England.
• New plans for airport expansion will be announced later this summer.
• Enhanced capital allowances will be offered to businesses in the new Scottish Enterprise Zones, and in one London Zone.
• The government will fund ultrafast broadband in ten cities across the country, with a further £50 million for smaller cities.