Increase in personal allowance
Having already announced that the income tax personal allowance would rise to £10,000 at the beginning of April 2014, this Budget went further and the figure is set to climb to £10,500 next year. At the other end of the scale, the 40p income tax threshold is also rising, from £41,450 to £41,865 – and then £42,285 next year. Read more.
Annual Investment Allowance
In one of George Osborne’s surprises, the chancellor doubled the Annual Investment Allowance (AIA) to £500,000 and extended it till 2015. The AIA is a kind of capital allowance, which offers tax relief at 100 per cent on qualifying expenditure in the year of purchase. Read more.
R&D tax credits – Increase payable element for SMEs
The rate of the R&D tax credit for loss-making small businesses is growing from 11 per cent to 14.5 per cent. The Forum of Private Business has come out and said that a loss-making business investing £100,000 will now be able to claim a cash payment of £32,600 – £7,800 more than before. The break means the government will now essentially be subsidising a third of the cost of R&D, compared to a quarter before the Budget. Read more.
New cell therapy and graphene Catapult centres
The current crop of Catapult innovation centres are set to be built on with the opening of cell therapy and grapheme offerings. Some £74 million will be invested over the next five years to enable large-scale manufacturing of cell therapies for late-stage clinical trials and provide SMEs with access to ‘cutting-edge’ equipment for research and development of novel grapheme. Read more.
Seed Enterprise Investment Scheme and CGT relief made permanent
Two years after establishing the Seed Enterprise Investment Scheme (SEIS), Osborne announced that its success has led to a decision to make it permanent. With investors committing up to £150,000 in a single year able to access tax relief of 50 per cent on their income, the scheme has helped early-stage start-ups to access finance. The government will also make the associated capital gains tax reinvestment relief a permanent feature of SEIS, providing relief on half the qualifying gains that individuals reinvest in SEIS qualifying companies in 2014-15 or subsequent years. Read more.
More on the Budget 2014:
Business rates for Enterprise Zones
The government is extending the deadline by which businesses need to have located in an Enterprise Zone in order to claim business rates discounts by three years until 31 March 2018.
Apprenticeship Grant for Employers increase
In an effort to boost youth employment and provide skilled workers for companies, the Apprenticeship Grant for Employers scheme (AGE) has received a boost of £85 million for both 2014-15 and 2015-16. The government is also introducing £20 million of funding to support apprenticeships up to postgraduate level. Employers who have not had an apprentice in the last year can secure a £1,500 grant for each of up to ten apprentices aged between 16 and 24 taken on. Read more.
Simplification of employee share schemes
Following a review conducted by the Office of Tax Simplification (OTS) nine recommendations to simplify the taxation of employment-related securities will be implanted. A decision has been made to delay introducing new rules for employment-related securities held by internationally mobile employees until April 2015, after which time all employment-related securities will be subject to these rules. The government will additionally consult on the recommendation to introduce a ‘marketable security’ into rules for taxing employment-related securities and on the proposal to introduce an employee shareholding vehicle. Read more.
Export finance extension
In another of George Osborne’s big bold announcements, he doubled the size of UK Export Finance’s lending scheme to £3 billion. There will also be a relaxing of conditions associated with loan sizes and lending will be made at the minimum interest rates allowed by international agreements. Also looking globally, the Global Entrepreneur Programme is being given £1.2 million more in 2014-15, and the same in 2015-16, to double the amount of overseas entrepreneurs it targets. Read more.
Alternative finance nod
Buried deep in the Budget document was the mentioning of a consultation aimed at helping match early-stage businesses which are turned down for a traditional loan with alternative lenders. The move comes a week after seven alternative funders came together to create a new web portal for recycling failed applications.
