Amidst fears of a double-dip recession, Chancellor of the Exchequer George Osborne had the unenviable task of presenting the Budget for the third time on 21st March 2012.
It came as no surprise when the Chancellor announced very early on in his speech that there would be no “unfunded giveaways”, confirming speculation that any concessions would need to be offset by an increase in tax elsewhere.
Although there was a significant change to the Stamp Duty on residential property costing over £2m, the wealthy will benefit from a cut in the top rate of tax down to 45% from April 2013 (currently 50%).
Individuals will gain from an £1,100 increase in the personal allowance from April 2013 but they could also lose out if they are earning over £50,000 and in receipt of Child Benefit.
Large companies will welcome the 2% cut in their rate of corporation tax. But whether small or large; all businesses were disappointed the government did not reverse their plans to reduce the Annual Investment Allowance to just £25,000.
Although small businesses appear to have been neglected in this Budget announcement, we should not overlook the recent introduction of the National Loan Guarantee Scheme and the forthcoming Seed Enterprise Investment Scheme. So whilst there was little mention of small businesses in this Budget, the government have already shown their support for small business owners already.
As usual, there was a lot of speculation about the measures that would be introduced in the Budget, but despite this there were still a number of surprises.
• The Personal Allowance will be increased by £1,100 to £9,205 from April 2013 (from April 2012 it will be £8,105)
• Under plans that were announced two years ago, the Annual Investment Allowance will reduce from £100,000 to just £25,000 from April 2012. Disappointingly, the government did not reverse this decision
• The VAT Registration threshold will increase from £73,000 to £77,000 from April 2012
• There was a reduction in the main rate of corporation tax (applicable to companies with profits over £300,000 per annum) from 26% to 24% from April 2012. However, there was no reduction in the Small Companies Rate of Corporation Tax
• Although announced in the Autumn Statement, it is worth highlighting that the Seed Enterprise Investment Scheme to encourage private investment in small, start-up companies is set to go ahead from April 2012
• The National Loan Guarantee Scheme should help small businesses access lower interest rates, by guaranteeing up to £20bn worth of unsecured bank loans
• From April 2013, the government will introduce a new cash accounting basis of the calculation of tax for small, unincorporated businesses
• Many business benefit from the Small Business Rates Relief, which offers reduced business rates on premises with a rateable value of up to £17,999 (£24,499 in London). Despite increased pressure, the government did not reverse their decision to withdraw this Relief in March 2013
• Legislation will be introduced in the Finance Bill 2012, to ensure the VAT treatment of various items is more consistent and to close a number of loopholes which in doing so has clarified a number of areas, including hairdressers’ chair rental