Business News

Round-Up of Budget Reaction

Chancellor George Osborne delivered the 2011 Budget on 23 March, saying he intended to “put fuel into the tank of the British economy”. With the implications of the Budget still sinking in, this round-up of some key points also looks at the response to the measures.

Corporation tax: main rate cut to 26% from April 2011, falling to 23% by 2014

“This shows ministers really are listening to businesses.”
British Chambers of Commerce

“Reductions in corporation tax of the magnitude planned for the next few years are likely to boost corporate activity in the UK.”
Institute for Fiscal Studies

Enterprise incentives: lifetime limit for Entrepreneurs’ Relief on capital gains tax doubled to £10 million; income tax relief on the Enterprise Investment Scheme (EIS) increased to 30%, both from April 2011; from April 2012, EIS extended to companies with fewer than 250 employees and no more than £15 million of gross assets pre-investment

“…will provide a much needed shot in the arm for entrepreneurship in the UK.”
Federation of Small Businesses

“Anyone who takes the risk of investing in a business should be able to reap the rewards…[these measures] will help bring more capital into promising companies.”
British Chambers of Commerce

“We are regularly told…the limits on the size of company that can raise money under the EIS make it too restrictive…[the raised thresholds] will make the scheme much more widely available.”
Chartered Institute of Taxation

Business rate holiday for small businesses extended to April 2012

“There is still much more to be done to bring predictability and affordability to the business rates regime for companies of all sizes.”
British Retail Consortium

Extending the business rate relief holiday for another year will give many SMEs greater confidence and allow them to invest in growth rather than paying more to the Exchequer.”
British Chambers of Commerce

SME research and development tax relief raised to 200% in 2011 and 225% in 2012

“The uplift will provide a much needed cash flow boost to innovative manufacturers.”
EEF

“Ministers must now ensure that small businesses do not face complex bureaucracy when trying to apply for these credits or this policy will fail to help.”
British Chambers of Commerce

Three-year moratorium on new domestic regulations from 1 April 2011 for start-ups and firms employing fewer than ten people; certain regulations already planned scrapped

“This will give the smallest firms the confidence to employ more staff without having to worry about constant changes in employment law.”
Federation of Small Businesses

“If the regulations needn’t be applied to one group of businesses, are they really warranted at all?”
British Retail Consortium

“…modest steps in the right direction.”

“The government now needs to go further…to develop a plan to stem the flow of new measures from Europe.”
EEF

British Chambers of Commerce

Immediate 1p reduction in fuel duty; inflation increases planned this year and next delayed; abolition of fuel duty escalator, replacing it with fair fuel stabiliser increasing tax on North Sea oil production when oil prices are high

“If oil prices stay high but volatile, this policy will do little to stabilise pump prices.”
Institute for Fiscal Studies

“[We] await further details on how a stabiliser will work in practice so that businesses can plan with confidence.”
British Chambers of Commerce

“…much needed relief on fuel duty”
TUC

Creation of 21 new Enterprise Zones, with simplified planning rules, superfast broadband and tax breaks for businesses

“…will boost our regional economies.”
British Chambers of Commerce

“…can make a difference at the margins but must not disadvantage neighbouring areas.”
British Retail Consortium

“Past UK experience with Enterprise Zones suggests that their main effect may be to cause activity to relocate rather than create new activity.”
Institute for Fiscal Studies

And finally…consultation on integrating income tax and national insurance contributions (NICs)

“…would be a huge simplification for employers and save countless millions in administrative costs…[the government] must consult widely to ensure we get it right first time.”
British Chambers of Commerce

“The value of reform depends heavily on the details…even before the consultation begins, the government has already ruled out some of the most radical options.”
Institute for Fiscal Studies

“…cannot be a substitute for reducing the overall business tax burden as well”
British Chambers of Commerce

LINK: Budget overview and documents