The 2013 budget was revealed yesterday by Chancellor George Osborne. Of all the points covered, here is a summary of the most important elements in relation to entrepreneurs, startups and businesses.
- Described by Osborne as ‘the largest tax cut in the budget’, a £2,000 Employment Allowance will be introduced from April 2014, to reduce employer national insurance contributions for all businesses. This means 450,000 small businesses will pay no insurance tax at all. ‘They can hire someone on £22,000, or four people on the minimum wage, and pay no jobs tax.’
- In 2014/5, everyone’s tax-free personal allowance will be £10,000, and increase of £560. This is a year earlier than planned, and should help business owners who are taking a modest amount of income out of their business and make workers better off.
- The planned 3p rise in fuel duty planned for 1 September 2013 is to be cancelled. According to the Budget report, this means that it will ‘cost the typical motorist £7 less to fill up their tank every time they visit the pump from April.’ This is great news for commuters and businesses dealing with delivery and travelling between clients.
- From 2014, employers will be able to offer tax-free loans to their workers for items such as season tickets for commuters, up to a value of £10,000. This is double the current limit.
- The ‘shares for rights’ scheme is to be made more generous, with the first £2,000 of share value that anyone receives under the new status to be free from income tax and NICs. The scheme means employees are able to forfeit key employment rights in exchange for tax-exempt shares in the company, and has been widely criticised since it was announced last year. On the plus side, employee ownership should help them to be more invested in the business.
- The government is to provide £30m for a Growth Vouchers programme in England, to test a variety of approaches in order to help SMEs overcome barriers to achieving growth.
- The main rate of corporation tax for big business is being reduced to 20% from 21%, boasting that this gives the UK ‘the lowest business tax of any major economy in the world’. Unfortunately, small businesses have not benefitted from this because there will be no cut in the tax paid on profits under £300,000. From 2015 small and big businesses will pay the same rate: of 20%.
How will these changes affect your business? Let us know below.
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