Business Finance: Budget brings good news – but not just yet, says Peter Harrup
- Credit: Archant
THE Chancellor’s comments on the economy in last week’s Budget were certainly gloomy, but the tax and other announcements for businesses brought the promise of good news – even we have to wait until April 2014 in many cases.
Businesses in housing and related sectors will be pleased with the Chancellor’s “Help to Buy” package for new house buyers. From April, anyone buying a new house that costs less than £600,000 can apply for a shared equity deposit of up to 20% of the property’s value and need only put down 5% themselves. A similar guarantee scheme for high loan-to-value mortgages will start on January 1, 2014 but is not limited to new builds. If, as hoped, these schemes drive more turnover of the residential housing stock, many thousands of businesses will benefit.
With transport costs a major concern for most businesses, the cancelling of the fuel duty increases scheduled for September is a relief. Further ahead, the reduction in employer national insurance contributions of up to £2,000 per business from April 2014 was the biggest surprise on Budget day.
It may not encourage SMEs to take on additional staff, but owners of smaller companies, particularly family owned businesses, will appreciate a £2,000 cut in their costs. The promise of childcare vouchers worth up to 20% of working parent’s childcare costs (up to £1,200 per child each year) from autumn 2015 will also help family businesses – both owners and their employees.
Extending the Capital Gains Tax exemption under the Seed Enterprise Investment Scheme (SEIS) into 2013/14, albeit at only 50% of the gain reinvested, is helpful at a time when many start-up businesses just can’t find funding from banks. For more established SMEs, the abolition of stamp duty on AIM shares has long been seen as a way of reducing the cost of raising capital. Longer term, the promise of another future cut in corporation tax to achieve a 20% flat rate for all companies by 2015/16 is reassuring.
The bit of immediate good news for small businesses was not even mentioned in the Budget. HM Revenue & Customs announced that until October 6, it will allow employers with fewer than 50 staff who find it difficult to report on every payment to employees at the time of payment, to file their RTI payroll returns on their normal payroll dates instead.
Despite the current gloom, if you take the right advice, there are reasons to feel positive about the future of your business finances.
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: : Peter Harrup is a partner at the Ipswich office of accountants and business advisers PKF.