Budget 2013: the impact for small to medium-sized businesses

20 March 2013

In his Budget speech, the Chancellor paid tribute to the energy and enterprise of British businesses and reiterated a desire to support and have confidence in the entrepreneurial spirit of the country. A call to arms, if you like, for the support of business endeavour and sustainable job creation.

There was recognition of the need to compete in a global environment in order to prosper and grow – either as a business or as a Government competing for international investment.

While there was a further reduction of the main corporation tax (CT) rate to 20% announced from April 2015 there’s no longer a lower rate for small businesses. Some may be disappointed at this but pleased at the introduction of the new employment allowance – an exemption of the first £2,000 of National Insurance contribution cost for any business or charity from April 2014. This is intended to equate to one new worker paid £22,400, or four employees on the minimum wage. 

On access to finance, the seed enterprise investment scheme (SEIS) will have its initial capital gains tax holiday, intended to kickstart the incentive for investing in early stage companies, extended for a period.

The introduction of the new employee shareholder status, under which employees can be given free shares in exchange for giving up some of their employment rights, has been deferred until 1 September 2013. But it’s been confirmed that as well as a £50,000 exemption on capital gains, those employees will also be entitled to income tax and National Insurance contributions relief on the first £2,000 of share value received.

There were other announcements around increasing the exemption from income tax for loans for things like season tickets from £5,000 to £10,000 and a commitment to infrastructure investment that could create some real medium-term opportunities for businesses in the construction sector.

But perhaps, to my mind, the most important re-statement of policy intent in terms of a buoyant thriving environment for all businesses was the Chancellors reiterated commitment to 'building the most competitive business tax system in the world'.

 

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