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Budget 2014 – Summary for small business owners

Here are the main points from today’s Budget, specifically as they relate to small businesses.

Economy

  • The UK’s GDP is predicted to grow by 2.7% in 2014, falling to 2.3% in 2015, and rising again to 2.6% in 2016.
  • The Government is expected to borrow £108bn in 2014, falling to £95bn in 2015.
  • The deficit (the amount the Government borrows each year) if forecast to be 6.6% of GDP in 2013-14, and is expected to fall to 5.5% in 2014-15.

Business Measures

  • Corporation Tax will be reduced to 21% from April 2014 (a pre-announced measure), and to 20% from 2015.
  • Class 2 National Insurance Contributions will now be collected via the self-assessment system from April 2016.
  • The Annual Investment Allowance (AIA) will be doubled to £500,000 from April 2014 until the end of 2015 (at a cost to the Treasury of £2bn). Almost all firms will receive 100% upfront tax relief on qualifying investments in plant and machinery.
  • The amount of lending provided for exporters will be raised to £3bn, and the interest charged cut by one third.
  • As pre-announced, the Employment Allowance will come into effect from April 2014 (whereby business owners can reclaim up to £2,000 in employers’ NICs per year).
  • The Seed Enterprise Investment Scheme (SEIS) and the capital gains tax 50% reinvestment relief will be made permanent.
  • Social Investment Tax Relief will now qualify for income tax relief at 30%, the same rate as the EIS and VCTs.

Personal Tax

  • The personal allowance will rise to £10,000 in April 2014, and will rise further to £10,500 from April 2015
  • The higher rate threshold will rise from £41,450 to £41,865 from April 2014, and by a further 1% to £42,285 in 2015.
  • 10% tax on savings is to be abolished completely from April 2015.

Other Measures

  • The ‘Help to Buy’ mortgage scheme has been extended until 2020.
  • Cash and Stocks ISAs will be merged. The annual limit will also be increased to £15,000 from 1st July 2014 to encourage saving.
  • Fuel duty will not rise in September.
  • The total cap on Premium Bond ownership will rise from £30,000 to £40,000 in June, and to £50,000 in 2015. The number of £1m winners is to be doubled.

Further Information

For the full Budget 2014 documentation, visit GOV.UK.

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