Let us start with the good news:
Income Tax Allowance rises to £10k
The rise in the Income Tax Allowance has been accelerated. From Apr 2014 everyone will have an Income Tax allowance of £10k. This is good news for everyone, but especially those on lower incomes where the tax reduced will be most appreciated.
Employers National Insurance Allowance
From April 2014 all employers will be given an allowance of £2,000 Employers National Insurance. In other words the first £2,000 of Employers National Insurance will not be deducted. Small business owners taking on their first employees are faced often put off by the cost, administrative burden and sheer time involved in recruiting and training staff.
Nevertheless many understand this is a hurdle worth overcoming in order to expand and develop the business. Certainly the allowance goes some way to reducing this burden in the first stages of employing people and we welcome this news as a helping hand.
Growth Voucher Scheme
The Chancellor has announced his backing of the British Chambers of Commerce proposal for Growth Vouchers, to the tune of £100 million. The Growth Voucher idea is that 20,000 small business should be offered money to access support in developing and growing their business. This could take the form of business planning, legal advice, staff training and recruitment, marketing.
Small business will be able to apply for £5,000 worth of vouchers to bring in resources they see would make a difference. Knowing how small business struggle to plan for growth, we welcome this initiative.
Fuel Duty Rise Scrapped
There will no longer be a 3p increase in the fuel duty which had been due to come into effect in September. Many small business owners have seen profits eroded by price increases in raw materials, so this is welcome news.
Clampdown on aggressive tax avoidance
Coming from an accountant, this may sound like a turkey voting for Christmas, but we welcome this stance by the Chancellor which we believe is in favour of small business owners. The kind of aggressive tax avoidance strategies that are implicated in the Chancellor’s statement are simply not accessible to small business owners since the possible financial gain is dwarfed by the legal and accountants fees involved.
This puts small business owners at a disadvantage. For example, some of the major energy suppliers are moving into the arena of providing household plumbing services. Certainly these companies are large enough to afford such fees, and this opens up the possibility that they may undercut a sole trader plumber not because they are more efficient or better at plumbing, but simply because they have found a way to pay less tax.
How much the rhetoric is matched by resources and action is debatable, but at least we welcome the new tone coming from Government.
Other announcements on reduction of Corporation Tax for businesses with profits over £300k, relief on Capital Gains for Seed Investment Enterprise Scheme shares and sales of businesses to their employees are not of particular relevance to most small business owners. Elsewhere VAT threshold rise to £79k and tax relief on employee shares do not appear to change the landscape significantly.
This brings us on to the bad news in the budget:
The Economy is stuck
George Osborne announced slower growth in 2013 than previously expected with forecasts falling from 1.2% to 0.6%. He also expects 2014 to be worse than previously predicted with growth penciled at 1.8% down from 2%.
Business Rates unchanged
Many had been calling on the Government to boost small business by giving more help with Business Rates. Sadly there was no announcement on this.