Let’s be honest, none of us expected very much from George Osborne’s fourth Budget.
During the Budget speech, I saw a man who wanted to help business pull us out of this great economic malaise. However, he was clearly a man with very limited room for manoeuvre, both financially and politically; many policies which could help stimulate growth may not be popular with the masses in the short term, and sadly there are those who seek to make political capital out of this. Unfortunately I think that George, and many of his advisers, may also be too cocooned from the real world to understand what business (especially SME’s) really need.
Despite all this, I think there are a surprising number of positives for business.
The main rate of corporation tax for next year had already been set; down again from 24% to 23%. The bonus was that the main rate is to continue to fall, hitting 20% in April 2015, when it will be unified with the existing small company’s rate.
The big surprise was the £2,000 pa allowance for every business and charity against their employer’s NIC liability – scheduled from April 2014. This should be of genuine benefit to small businesses, who will see their tax burden reduced, and it gives particular encouragement to those taking on their first employees.
We will need to await the detail though, as I would expect to see complicated anti avoidance provisions.
A good move by Osborne in the Budget was to extend the Seed Enterprise Investment Scheme to cover capital gains made in the 2013/14 tax year. However, the disappointment was that only 50% of those gains will be allowed to benefit from the relief.
The Enterprise Management Incentive share option scheme received a boost, as those who participate will find it easier to qualify for Entrepreneur’s Relief. Not only will the usual requirement to have 5% of the ordinary shares be waived, but the one-year qualifying period will also start to run from the time when the option is granted, rather than when the shares are acquired.
The Chancellor seems to have tried hard for business, but what the Chancellor really needs to deliver to encourage growth is some confidence.
Consumers need confidence if they are to spend their money. The entrepreneur needs confidence to invest and grow their business. They need a system which support on an on-going basis, not just at particular key points in the business lifecycle. This means a bolder look at the system of income tax, National Insurance and benefits.
I fear that the Chancellor does not have enough room for manoeuvre, political will and understanding, to be able to really instil the confidence we need.
