With all the headlines being focused on the increase in VAT in today’s budget, it is easy to forget that if the economy is to grow, then it was critical for George Osborne to put measures into place that will help businesses to create jobs and prosperity over the next five years.Thankfully, he has taken a leap forward in doing this by cutting the levels of tax burdens on businesses that will, hopefully, help them to develop and, most importantly, create jobs in the economy over the next Parliament.
These include:
- Corporation tax cut to 27 per cent next year and to be cut by 1 percentage point a year for next three years to 24 per cent
- Small companies’ corporation tax rate cut to 20 per cent
10 per cent Capital Gains Tax rate for entrepreneurs extended to first £5 million of qualifying gains - Increasing the threshold for employer National Insurance Contributions (NICs) by £21 a week above indexation which will mean that the number of employees for whom employers pay no NICs will rise by 650,000.
- Exempting new businesses which start up in outside of the South East of England, East of England and London areas from paying the first £5,000 of Class 1 employer NICs due in the first twelve months of employment - this will apply for each of the first 10 employees hired in the first year of business
Whilst those are the headlines for business side of the budget, there are other important measures hidden away in the Treasury’s published document.
These include:
- Increasing the Enterprise Finance Guarantee (EFG) facility (which supports lending to viable small businesses that lack sufficient collateral or the financial track record to access a normal commercial loan) by £200 million, which will support additional lending of up to £700 million for small businesses until 31 March 2011. In addition, a processing target of 20 business days will be introduced for all major lenders participating in the EFG.
- Launching a new Enterprise Capital Fund to support small businesses with high growth potential, a fund which will form part of the existing £237 million programme of Enterprise Capital Funds and provide an extra £37.5 million in equity finance. It will be funded through a £25 million Government contribution and £12.5 million in private co-investment.
- Publishing a Green Paper on business finance before the summer recess which will consider the broad range of finance options for businesses of different sizes including bank lending, equity and corporate debt.
- Putting forward detailed proposals, after the Autumn spending review, on the creation of a Green Investment Bank to help the UK meet the low-carbon investment challenge.
- Consulting with business to review the taxation of intellectual property, the support R&D tax credits provide for innovation and the proposals of the Dyson Review.
George Osborne also promised to look at the corporation tax regime in Northern Ireland and promised a review in the autumn of measures to help rebalance the Northern Irish economy, which would "examine mechanisms for changing the corporation tax rate".
I can only hope that any such review also considers Wales which is, after all, the poorest region in the UK.
