Budget 2014: small business winners and losers

Budget 2014: small business winners and losers

March 21, 2014 by Guest

George Osborne’s 2014 Budget was announced on Wednesday, bringing with it tax changes, legislative tweaks, gains for some and losses for others. With little spare cash to play with, what did the Government announce for the UK’s entrepreneurs?

Personal Tax changes

UK workers can currently earn £9,440 before they start paying income tax. A rise to £10,000 was already planned for April 2014 and on Wednesday Osborne said this would rise to £10,500 in April 2015. This means £800 a year more for the average taxpayer and also means that three million workers won’t have to pay any income tax at all.

The amount of money you earn before paying the higher 40% income tax rate is going up from £41,450 to £41,865 in April 2014, then up to £42,285 in April 2015. Employer National Insurance contributions for under-21s were also scrapped - this is relevant if you employ young workers.

Support for savers

If you have ISAs (Individual Savings Accounts) you’ll know there are currently two types: Cash and Stock. These will be merged into one product, making things simpler, and you’ll be able to save £15,000 tax free from July.

The 10% tax rate on savings has also been scrapped, as well as many of the rules on accessing your pension savings.

Business investment boost

To encourage new investors to back social enterprises, the government has introduced 30% income tax relief for social investment. Eligible social enterprises will be able to receive maximum investment of £290,000 over a three year period.

Also, startups are being encouraged to invest in innovative ideas in risky markets, with Research & Development tax credits available for loss-making SMEs increased from 11% to 14.5%.

Finally, the 50% relief on capital gains tax for VC reinvestors has been made permanent, which will help to continue investment support for small businesses.

Simplification of Class 2 NIC

A small but welcome change for the self-employed. Class 2 National Insurance contributions, which are currently paid weekly by Direct Debit, will be collected via Self Assessment.

Good news for business owners

There was a reform of Air Passenger Duty, which will reduce the cost of international travel. Extra support was also announced for UKTI - the body which helps UK firms do business abroad - and the lending available to exporters doubled.

A £200 million pot was announced for local councils to help repair infrastructure damaged by recent floods. There will also be support for 200,000 new homes at designated sites across the country, potentially creating thousands of new jobs.

Win or lose?

The budget was fairly average for start ups and entrepreneurs - not bad, but not great.

The encouragement of business investment was the most positive news and this should help out a lot of firms, especially in the manufacturing sector. Personal tax cuts will also help to keep a bit more cash in your pockets. Finally, there was some excellent support for specific industries, but obviously this is only good news for a limited number.

Blog supplied by Nick Chowdrey of Crunch Accounting.

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