Chancellor of the Exchequer, George Osborne, presented his fifth Budget statement today against the backdrop of a stabilised economy, rising property values and growth in wage rates.In spite of this, the Chancellor fervently continued with his mission of austerity measures.
Our summary of The Budget outlines the changes which are happening in the coming weeks and months for small business owners.
Our full Budget Report for Small Businesses (pdf) is available to download - click here to download.
Budget 2014 Highlights
Employers and Youth Employment
Small businesses employing staff and young people will be pleased to hear that the Government has taken a number of steps to reduce the cost of employing staff and encourage employing young people; Apprenticeship grants for small businesses have been extended; employers with employees under 21 will no longer be required to pay Class 1 National Insurance contribution (NIC) up to the upper earning limit for those employees; and from April 2014 all businesses and charities will be entitled to an Employment Allowance of £2,000 per year towards their employer NIC bill.
Building Industry Boost
The new announcement that the Government’s Help to Buy scheme will be extended to 2020 is great news for local traders involved in the construction industry, including builders, electricians, plumbers and estate agents. They have also taken further action to boost housing supply by introducing an equity loan scheme to create £500m of funding for SME housing developers.
Fuel Duty Freeze
It had already been announced in the 2013 Autumn Statement that there would be no increase in fuel duty in 2014. It has now been confirmed that the planned fuel duty increase in September 2014 has been scrapped and that fuel duty will remain frozen for the remainder of this Parliament.
Personal Tax Allowance
Low and middle-income earners will be delighted to hear the personal allowance, which will rise to £10,000 this April, will increase further in April 2015 to £10,500.
Seed Enterprise Investment Scheme
Less than two years after the lauch of the Seed Enterprise Investment Scheme (SEIS), the Chancellor has announced that its continued success has led to a decision to make the scheme permanent. SEIS investors can invest up to £100,000 in a single tax year, and in return can receive income tax relief of up to 50 per cent of the amount invested in the tax year during which the investment is made.
Annual Investment Allowance
Businesses looking to invest in a tax-efficient manner have been handed a boost by Mr Osborne. The Annual Investment Allowance (AIA), which enables firms to invest in new plant and machinery for maximum tax benefits, was originally cut to £25,000 by the coalition.
However in this Budget, the Chancellor has provided considerable tax aid to businesses, extended the allowance until 2015 with the maximum businesses can deduct from taxable profits now set at £500,000.
The main rate of corporation tax is applicable to companies with profits in excess of £300,000. From April 2014, it will be 21% and just 20% by April 2015.
Yet again, there was no comparable cut in the small profits rate which is payable by companies with profits under £300,000 - which will remain at 20% for the foreseeable future. This will mean that from April next year, the largest companies will be paying the same rate of corporation tax as the smaller companies.
Simplification of Class 2 NICs
It was announced that the Government will simplify National Insurance Contributions for the self-employed. From April 2016 Class 2 NICs will be collected through self assessment alongside income tax and Class 4 NICs.