March 20, 2013
Businesses are to save £2,000 on employer National Insurance contributions (NICs) from 2014, thanks to a new Employment Allowance announced by George Osborne in his 2013 Budget. This means that some 450,000 small businesses (about one third of all employers) will pay no employer NICs at all from April 2014.
This was one of the headline initiatives in a Budget that certainly had some good news for small firms but still left many asking how Osborne is proposing to boost growth as the Chancellor had to downgrade the UK’s growth forecasts again.
Other big announcements included a reduction in the corporation tax main rate to 20% (from April 2015) — bringing it in line with the small profits rate and creating one simple rate for all businesses, no matter what size they are. This gives the UK the lowest business tax of any major economy in the world. However, this did not offer any immediate advantage for SMEs and there was no action on business rates — something that had been strongly lobbied for by the major business bodies.
A key announcement was the scrapping of the planned 3p fuel duty rise. A major new initiative to get the housing market moving was also launched. The new help-to-buy scheme will provide £3.5bn in capital spending over three years for shared equity loans and a new mortgage guarantee was also announced.
There will also be a considerable investment in infrastructure from 2015-16, with Osborne announcing that £3 billion a year will be spent up to 2020 — representing a total investment of £15 billion.
Osborne also revealed that the Bank of England would adopt new policies to stimulate the economy following discussions with both the outgoing governor, Sir Mervyn King, and his successor, Mark Carney.
Other announcements aimed at businesses included:
There was, however, little significant detail on how to get banks lending again — aside from the fact that the Funding for Lending scheme may be extended and the announcement that the state-run business bank will be fully operational by 2014.