The Chancellor George Osborne announced a ‘fiscally neutral’ budget on Wednesday, notable for containing a few targeted tax reductions, largely financed by savings in Government spending. Here are the main points from the new budget and how they will affect individuals and businesses in Lincolnshire.
Help for individuals
There will be an increase in the personal allowance (the threshold above which individuals will start to pay tax) to £10,000 from 6th April 2014. This increase gives more tax relief for all taxpayers, and unlike in some prior years, this will include higher rate taxpayers as well.
The Chancellor opened his statement by announcing this was a budget “for those who aspire to work hard and get on”. A number of the announcements were centred around this comment, including a doubling to £10,000 of the amount employers can loan to their employees without an income tax charge arising on the employee and a National Insurance charge on the employer.
Assistance for small businesses
The Chancellor also announced a new Employment Allowance reducing the burden of Employer’s National Insurance by up to £2,000 per year. This is available to all businesses.
Tax cuts for large companies
The Chancellor had previously announced that the main rate of Corporation Tax was to reduce to 21% from 1 April 2014. The Chancellor announced that this is to be reduced further to 20% from 1 April 2015.
Once this is in force there will be only one flat rate of Corporation Tax of 20%, simplifying Corporation Tax calculations.
The feel-good factor
An increase in fuel duty was forecast for September 2013 of 1.89p per litre and this increase is to be abolished. This will benefit both individuals and businesses that rely on the mobility of their workforce or deliver goods by road.
The Chancellor announced that the proposed duty increase on alcohol is to remain in place, except for beer which will instead benefit from a 1p per pint reduction. It was reported that 10,000 pubs have closed in the past decade, so there is at least some silver lining for those in the hospitality industry.
Announcements were made that the Government will now fund interest-free loans on up to 20% of the value of newly built property where the purchaser provides a 5% deposit. This will be great news for those looking to get on the property ladder, but it will also be gratefully received by property developers, hopefully boosting the housing market.
The Chancellor further reinforced the Government’s stance on preventing both tax evasion and tax avoidance, following his announcements in the Autumn statement, calling this “one of the largest ever packages of tax avoidance and evasion measures”.
As well as a number of targeted anti-avoidance measures intended to close specific loopholes in tax law, for the first time in the UK a General Anti-Avoidance Rule (“GAAR”) is to come into effect. This is intended to prevent artificial tax avoidance schemes achieving an unfair tax advantage. This has been in the pipeline for some time now, but it will now come into effect from April.
In addition, the Chancellor has announced a “naming and shaming” system for those promoting tax avoidance schemes.