Budget 2011 – the ‘Budget for Growth’
Thursday, 31st March 2011
Here is a short summary at the finer details of this year’s budget and the provisions that have been made to fuel growth in businesses across the UK and to encourage enterprise.
Chancellor of the Exchequer George Osborne billed his second Budget as a “Budget for growth”, telling MPs that it was an “urgent call to action for Britain”. His main ambitions, he said, were to ease the economic burden on families and businesses while promoting Britain as the best place to do business in Europe, declaring that “Britain is open for business.”
Outlining measures aimed at stimulating growth in business, the chancellor acknowledged that small businesses had been a victim of the economic crisis.
The Chancellor revealed that he now expects Britain's economy to grow at a slower rate than previously expected with the Office for Budgetary Responsibility cutting its growth forecast for 2011 from 2.1% to 1.7%.
Osborne outlined plans to cut corporation tax by two per cent from April 2011, which is more than the one per cent previously announced. The Bank Levy rate is to be adjusted next year to offset the effect of corporation tax reductions on banks.
Tax simplification also played a leading role in the Budget, with Osborne acknowledging that taxes should be “efficient” and “support growth”. Forty three tax relief’s will be scrapped by the Chancellor following recommendations from the Office of Tax Simplification.
There was also a boost for small firms, with a three year moratorium on new regulations for firms with fewer than 10 staff and for the business rate relief holiday for small firms also being extended by another year. Osborne also announced that Research and Development tax credits for small businesses will be raised to 200 per cent this year.
Enterprise will be boosted in the UK by twenty one new “enterprise zones” being launched, which will be backed by tax incentives. Unemployment rates were targeted by the initiation of 40,000 new apprenticeships being created for unemployed people along with 100,000 work experience placements.
Osborne also set out measures that will aim to help start-up businesses in the UK, with entrepreneurs’ relief being doubled from £5 million to £10 million from April 2011.
Tax avoidance is set to be clamped down on, with three forms of Stamp Duty Land Tax loopholes being among those closed by the Treasury in a move expected to raise £1 billion each year. The Chancellor also said that capital allowances would be “tightened” to “shut down open abuses.”
The Chancellor tackled the burden of fuel costs on families by announcing a surprise cut to fuel duty by 1p per litre, which will be implemented from 6pm on 23 March. The planned increase in fuel duty, which was due to be implemented in April, will now be delayed until 2012.
The Chancellor also set out measures that would “dramatically” simplify Gift Aid, with an introduction of an online filing system in 2013. To encourage people to leave 10 per cent of their estate to charity, the Chancellor said he would reduce the inheritance tax levied on the estates of those who do, from 40 per cent to 36 percent.
Andrew Faulkes, Managing Director of Crombie Wilkinson Solicitors said: “Small to medium businesses have faced a tough couple of years, so it is potentially good news that the Government’s focus now seems to be on helping them to grow, with the aim of aiding the economy’s recovery and ensuring businesses can be sustained in the UK. Some of the planned changes could mean there are some positives ahead for the country’s smaller enterprises.”
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