|
|
|
|
| See Will Abbott and Lucie Hammond Partners at Randall and Payne go over the budget on YouTube... |
|
 |
|
|
Budget key points at a glance
| • |
The foundation for the economic recovery must come from the private sector and will be enterprise led. |
| • |
Reduction in structural debt – £4 out of every £5 from government spending and only £1 from tax rises. |
| • |
Economic growth estimated to be 1.2% 2010, 2.3% 2011, 2.8% 2012, 2.9% 2013 2.7% 2014 |
Will Abbott of Randall and Payne says: ‘It’s good that Mr Osbourne realises that small business and enterprise has a key role to play in driving the economy forward. He promised to tell us everything so it will be interesting to see what’s in the detail.’
Corporation tax
| • |
Corporation tax reduced by 1% from April 2011 and then being reduced 1% every year until it reaches 24% in 2014. |
| • |
Small companies rate of corporation tax will be reduced to 20% from April 2011. |
Lucie Hammond of Randall and Payne says: ‘A budget that recognises that we’re in a global, not just national market and we need to be competitive to attract business to the UK.’
Capital allowances
| • |
From April 2012 plant and machinery allowance to drop from 20% to 18% and long-life assets from 10% to 8%. |
| • |
Small companies: a reduction in the annual investment allowance to £25,000 from April 2012. |
Lucie Hammond of Randall and Payne says: ‘Companies will benefit in the short-term from both lower corporation tax rates and existing capital allowances. This should encourage capital investment over the next two years whilst the higher rates still exist.’
Will Abbott of Randall and Payne says: ‘It is crucial for the economy that we continue to invest and innovate.’
National insurance
| • |
Threshold increasing so it will be cheaper to employ a person on £20,000 or less. |
Will Abbott of Randall and Payne says: ‘This will encourage employers to take on lower-paid employees which dovetails with Mr Osbourne’s wish to decrease the benefits’ bill.’
EFG scheme
| • |
Proposals to expand EFG scheme and a further review of access to business loans |
Will Abbott of Randall and Payne says: ‘In practice these schemes have had little impact on our clients and over the last few weeks we have actually seen a tightening of bank lending locally in Gloucestershire.’
VAT increase
| • |
From 4 January 2011 VAT will rise to 20% - |
| • |
0% remaining for food, children’s clothes and books |
Lucie Hammond of Randall and Payne says: ‘Retailers will no doubt welcome the spending boost up to Christmas but can then expect a lull in spending in the New Year.’
Will Abbott of Randall and Payne says: ‘This may well encourage people to spend on big-ticket items such as property extensions and renovations which should benefit local builders.’
Lucie Hammond of Randall and Payne says: ‘Care homes, charities and other exempt businesses will be affected because they can’t recover their VAT.’
Capital gains tax
| • |
Increase in entrepreneurs' relief to the first £5 million from £2 million and preservation of the 10% rate. |
| • |
Basic rate tax payers will continue to pay 18%. |
| • |
An immediate increase (from midnight tonight) to 28% for higher rate tax payers. |
Lucie Hammond of Randall and Payne says: ‘The increase in entrepreneurs' relief will be welcomed by business owners. The increase for higher rate tax payers was expected, though the immediacy of the increase leaves no further room for planning.’
Income tax
| • |
Increase in personal allowance of £1000 to £7475 in April 2011. |
| • |
Higher rate tax payers not expected to benefit as the higher rate tax will be frozen until 2013–14. |
Lucie Hammond of Randall and Payne says: ‘This was widely anticipated.’
Regional tax scheme
| • |
To support the creation of new jobs in the private sector in areas outside of London and South East – up to £5000 exempt on National Insurance for each of the first ten employees in qualifying new businesses. |
Lucie Hammond of Randall and Payne says: ‘We really need to wait for the details of this scheme plus the National Insurance changes to understand the full implications of this.’
Will Abbott of Randall and Payne says: ‘It’s good to see that Gloucestershire is not excluded as the county often misses out on regional assistance.’
Pensions
| • |
Tax relief on pension contributions to be reviewed to see whether they can generate the same tax savings but in a more straightforward way from the current system. |
| • |
Retirement age increase to 66 to be accelerated. |
Lucie Hammond of Randall and Payne says: ‘Any simplification in this area would be welcomed.’
Conclusion
Will Abbott of Randall and Payne says: ‘Overall the budget was clever as some of the tax rises announced in advance should encourage people to commit to investment. There is a climate of fear holding people back, this budget should help to alleviate this and strengthen the local economy.’
|
|
|
|
|
|
|
|
|
