Cut to employers’ national insurance bills:
From April next year, to boost hiring, the government will eliminate the first £2,000 off the national insurance bill of every business in the country. According to the chancellor, this means that an estimated 450,000 small businesses will pay no NI contributions at all. To take advantage of the allowance, businesses will have to inform HM Revenue & Customers.
Funding for Lending extension:
Also contained within the Budget, in small detail, was the news that the Treasury is looking to extend the Funding for Lending programme. In its current guise, the initiative is running from August 2012 to January 2014 with a mandate to lend approximately £60 billion. Recent figures highlighted that overall bank lending fell in the last three months of 2012, prompting criticism of Funding for Lending.
Continued development of the government’s business bank:
George Osborne revealed that the coalition will be moving ahead with the launch of its business bank. First outlined by business secretary Vince Cable in September 2012, no more details were given about the scope of lending or when operations will commence.
Personal allowance increased for income tax:
An introduction to the 2014/15 tax year will see each person’s tax-free allowance increased by £560 to £10,000. The move had been planned, but was only due to come in for the following year.
£50m annual boost to employee ownership sector:
The government will inject £50m into the employee ownership industry each year from 2014/15 in order to ‘further incentivise growth of the sector’. There will also be an ‘off the shelf’ publication on the employee ownership model and other possible incentives.
Seed Enterprise Investment Scheme (SEIS) capital gains tax relief extension:
To encourage more investment in start-up businesses, the chancellor revealed that the capital gains tax holiday will remain in place for another year. Old rules meant that tax exemption was only available on gains realised in 2012-13 then invested in the same year.
Capital gains tax can be extinguished completely by investing in a SEIS. This is compared to other seed capital schemes such as Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCT), where capital gains tax is only deferred by re-investing into another scheme.
Doubling of employer loan limit:
Another initiative being introduced in a year’s time will mean that employers will be able to extend tax-free loans for items such as season tickets to their workers up to a value of £10,000. The wording of the pledge reads, ‘Employer provided benefits in kind: beneficial loans – Legislation will be introduced in Finance Bill 2014 to increase the exempt threshold for the small loans exemption limit from £5,000 to £10,000.’
Social enterprises boosted:
There will be a new tax relief to encourage private investment in social enterprise. A consultation will happen by this summer and the relief will be introduced in the Finance Bill next year.
Tax relief for business owners looking to sell their company:
The 2013 Budget also saw the introduction of capital gains tax relief on the sale of a controlling stake in a business to its employees. The new capital gains tax exemption will be a complement to existing Enterprise Management Incentives (which are tax free options with no tax or NI payable which may be granted to individual employees to a total market value of up to £250,000 per individual and a total of £3 million per company).
Plans have also been previously announced to extend Entrepreneurs’ Relief to cover gains made on shares acquired through the exercise of EMI options.
Removal of stamp duty reserve tax for shares traded on growth markets:
Stamp duty reserve tax on shares in AIM and ISDX quoted companies will be abolished from April 2014. The chancellor said that the government will get rid of the 0.5 per cent tax to ensure that the UK becomes the place where individuals can raise and invest money.
The news is the second recent announcement that is set to provide AIM with a boost in its fortunes. In September 2013, it was announced that the UK government would be joining forces with the London Stock Exchange in an effort to make entry to the public market easier for entrepreneurs.
Corporation tax to be cut to 20 per cent:
While only affecting larger businesses, the government has sped up its corporation tax cut commitment. The coalition government came to power in 2010 when corporation tax stood at 28 per cent. Successive Budgets have brought the figure down to the planned figure of 21 per cent.
