How will the Budget affect your business?

 

The Chancellor of the Exchequer, George Osborne, presented the 2011 Budget on 23 March.

 

The Budget builds on announcements in the Spending Review 2010 and the June Budget 2010 which can be found at HM Treasury website – Opens in a new window along with all the detailed announcements.

The Budget sets out a package of measures with the key themes of Growth and Fairness.

The Budget also launches the Government’s Plan for Growth – Opens in a new window, a package of measures aimed at supporting private sector investment, enterprise and innovation. This includes measures to increase the competitiveness of the UK tax system; reduce the burden of regulation; and increase incentives for business investment.

Key measures in the Budget for businesses include:

From 6pm on 23 March 2011

Fuel Duty
Fuel Duty will be cut by 1p per litre.

Tobacco Duty changes
Tobacco duty rates will rise by 2% above inflation, and the duty regime will be reformed in due course.

From April 2011

Corporation Tax reduction
The main rate of Corporation Tax will be reduced to 26% from April 2011, with further yearly reductions of 1% until it reaches 23% in 2014. See  guidance on Corporation Tax rates.

Domestic Regulations
A moratorium exempting micro businesses and start-ups from new domestic regulation will be introduced for three years from 1st April.

R&D Tax Credits
The SME rate of R&D Tax Credits will increase to 200% from April 2011, and 225% from April 2012.

Reform of Enterprise Investment Scheme (EIS)
The Enterprise Investment Scheme and Venture Capital Trusts will be reformed. This will include raising the rate of EIS income tax relief to 30% from April 2011.

Vehicle Excise Duty (VED) rates
VED will increase by RPI indexation only in 2011-12. Rates for Heavy Goods Vehicles will be frozen.

National Insurance rate rise
As previously announced, the National Insurance rate rise will go ahead.

Longer term

Controlled Foreign Company rules
New rules will allow groups based in the UK to compete more effectively with those based overseas.

Simplification of the tax system
43 outdated Tax Reliefs will be abolished.

Merger of Income Tax and NI
The Government will consult on options for integrating the operation of Income Tax and National Insurance Contributions.

Changes to Health and Safety regulations
The recommendations of Lord Young’s review of H&S regulations will be implemented.

Entrepreneur’s Relief
The lifetime limit for Entrepreneur’s Relief will be doubled to £10 million.

Enterprise Zones
21 new Enterprise Zones will be established, promoting growth. (for further discussion with the Welsh Assembly Government as these might apply to Wales)

Personal Allowances
The Personal allowance for income tax for under 65s will be increased to £8,105 from April 2012.

Fuel Duty
Inflation only increases in Fuel Duty will be deferred until 1st January 2012. The April 2012 increase will be implemented on 1st August 2012. See guidance on Fuel Duty.

Encouraging the Housing Market
The Government will work with house builders to assist over 10,000 first time buyers to purchase new build property.

Summary of tax changes

For further information and the full Budget report you can visit the HM Treasury website and HMRC website.