TWP Accounting, a chartered accountancy firm based in Surrey, is advising clients to look at the finer details of this year’s Budget and the provisions that have been made to fuel growth in businesses across the UK and to encourage enterprise.
Chancellor of the Exchequer George Osborne billed his second Budget as a “Budget for growth”, telling MPs that it was an “urgent call to action for Britain”. His main ambitions, he said, were to ease the economic burden on families and businesses while promoting Britain as the best place to do business in Europe, declaring that “Britain is open for business.”
Outlining measures aimed at stimulating growth in business, the chancellor acknowledged that small businesses had been a victim of the economic crisis.
The Chancellor revealed that he now expects Britain’s economy to grow at a slower rate than previously expected with the Office for Budgetary Responsibility cutting its growth forecast for 2011 from 2.1% to 1.7%.
Osborne outlined plans to cut corporation tax by two per cent from April 2011, which is more than the one per cent previously announced. The Bank Levy rate is to be adjusted next year to offset the effect of corporation tax reductions on banks.
Tax simplification also played a leading role in the Budget, with Osborne acknowledging that taxes should be “efficient” and “support growth”. Forty three tax reliefs will be scrapped by the Chancellor following recommendations from the Office of Tax Simplification.
There was also a boost for small firms, with a moratorium on new regulation for firms with fewer than 10 staff for three years. The business rate relief holiday for small firms will also be extended by another year.
Continuing with the theme of aiding SMEs, Osborne also announced that Research and Development tax credits for small businesses will be raised to 200 per cent this year and there will be not be any new regulations for firms with fewer than 10 staff for three years.
Enterprise will be boosted in the UK by twenty one new “enterprise zones” being launched, which will be backed by tax incentives. Unemployment rates were targeted by the initiation of 40,000 new apprenticeships being created for unemployed people along with 100,000 work experience placements.
Osborne also set out measures that will aim to help start-up businesses in the UK, with entrepreneurs’ relief being doubled from £5 million to £10 million from April 2011. Capital allowances will also be doubled from four years to eight years in a bid to encourage more investment in new equipment.
Tax avoidance is set to be clamped down on, with three forms of Stamp Duty Land Tax loopholes being among those closed by the Treasury in a move expected to raise £1 billion each year. The Chancellor also said that capital allowances would be “tightened” to “shut down open abuses.”
The Chancellor tackled the burden of fuel costs on families by announcing a surprise cut to fuel duty by 1p per litre, which will be implemented from 6pm on 23 March. The planned 4p per litre rise due in April will be delayed until 2012.
The Chancellor also set out measures that would “dramatically” simplify Gift Aid, with an introduction of an online filing system in 2013. There will also be a ten per cent discount on inheritance tax for those who leave 10 per cent of their estate to charity.
TWP accounting partner, Mike Dawes, said: “Small to medium businesses have faced a tough couple of years, so it will hopefully mean good news now that the Government’s focus seems to be on helping them to grow and that building up a business in the UK will be made easier. Some of the planned changes could mean there are some positives ahead for the country’s smaller enterprises.
“However, it would have been good to see further measures taken to ensure businesses face less costly regulations.”
For more advice about the Budget, please contact TWP Accounting on 01932 704 700