Here’s a summary of how George Osborne’s plans will affect your business.

Here’s a summary of how George Osborne’s plans will affect your business.

VAT increased: Tax on most goods and services will go up from 17.5 to 20 per cent from 4 January 2011, but zero-rated items will remain exempt for the next five years. Tax rates on insurance premiums will be raised from 5 to 6 per cent and from 17.5 to 20 per cent respectively.

Corporation tax cut: The smaller company rate of corporation tax is to be cut from 21p to 20p in the pound. Larger companies are being treated more generously, with the current 28p rate to be reduced to 24p over the next four years.

National insurance (NI) contributions: Start-ups outside London and the South East will save up to £5,000 in employers’ NI contributions for each of their first ten employees. This measure will be introduced no later than September this year, but the Chancellor has promised that any business set up from the date of the Budget onwards will benefit. In addition, the threshold at which employers start to pay NI will be raised by £21 per week above indexation in April 2011.

Capital gains tax (CGT) to go up: Those who pay income tax at the basic rate will continue to pay CGT at 18 per cent. However, higher-rate taxpayers will pay CGT at 28 per cent.

Entrepreneurs’ relief boosted: The 10 per cent rate of CGT that applies to the first £2 million of entrepreneurs’ gains over a lifetime will now apply to the first £5 million of those gains.

Enterprise finance guarantee (EFG) extended: The EFG scheme that supports small and medium-sized enterprises’ access to bank lending is to be prolonged.

Capital allowances trimmed back: The rate at which tax relief is given for capital spending will be reduced from 20 to 18 per cent, meaning that businesses ‘will still receive full tax relief, but over a longer time frame’, according to George Osborne. The annual investment allowance will be reduced to £25,000, but ‘over 95 per cent’ of businesses will still be fully covered for their capital investments.

Public spending to be slashed: Outside of the NHS and international aid, there will be average real terms cuts in the budgets of government departments of around 25 per cent by 2014/5. This equates to reductions in spending of £30 billion a year by 2014/5, in addition to measures announced before the Budget. The cuts will be achieved, in part, by a two-year public sector pay freeze from which workers earning less than £21,000 will be exempt.

Lower earners to pay less income tax: The personal allowance for under-65s will be increased by £1,000 in April 2011, to £7,475. The aim is to raise it to £10,000 within this parliament.

New bank levy: Osborne expects a new tax on the assets of banks and financial institutions to raise more than £2 billion a year. He says the French and German governments are committed to introducing similar levies.

Duties frozen: there will be no new increases in duties on alcohol, tobacco and fuel. The government will ‘explore’ changes to aviation tax including switching to a per-plane rather than a per-passenger duty. The previous government’s plan to increase duty on cider will be reversed.

New regional growth fund to be established: This fund will support projects in the English regions that support business growth and create jobs. The devolved administrations in Scotland and Wales will be encouraged to set up similar schemes, while a consultation paper will be published in autumn on ‘rebalancing the Northern Ireland economy’, looking at options including the creation of economic enterprise zones and changing the corporation tax rate for businesses in the province.