BUDGET REVEALS 'BRITAIN OPEN FOR BUSINESS' (23/03/11)
“Britain is open for business” was the key message from Chancellor George Osborne, as he revealed a number of measures to help UK companies – as well as encourage international enterprises into the country.
Top of the list was the announcement that Corporation Tax will be reduced by 2% from April 2011, rather than 1% as previously intended, and fall by 1% in the next three years, to reach 23%.
Mr Osborne also said that he was looking to boost enterprise and exports, as part of a Budget "for making things". He said he also wanted the UK to be the best place to establish a company.
As part of that there will be 21 new Enterprise Zones created across the UK. "We have to compete to create jobs and growth," he said.
Mr Osborne said he wanted to encourage a number of sectors, including creative and green industries, and life sciences.
“This is not a tax-raising budget, this is a budget built on sound money, based on robust figures and for making things not making things up,” he said, adding that the country’s fiscal plans have been strongly endorsed.
Although average quarterly growth was higher than forecast, the annual forecast will be revised down in 2011 from 2.1% 1.7%. Figures for 2012 are expected to fall from 2.6% to 2.5%; 2.9% in 2013, 2.9% in 2014 and 2.8% in 2015.
Meanwhile, the Entrepreneurs Relief scheme - which gives some capital gains tax relief to small and medium-sized business owners, especially of family companies - would be doubled to £10m from early April.
Meanwhile, the Office for Budget responsibility expects inflation to remain between 4 and 5% this year - dropping to 2.5% next year and 2% in two years' time.
The chancellor said he will meet his target that debt should be falling as a percentage of GDP by 2015/16 - in fact, he added, he will meet it one year earlier. Borrowing for the year will be £146bn – below target.
The Budget also targeted taxed. “Our taxes should be efficient and support growth; certain and predictable; simple to understand and effective,” said Mr Osborne, adding that 43 reliefs would be abolished.
In addition, the Government will consult on merging NI and Income Tax. “Our purpose is not to increase taxes, but to simplify them and make our tax system fit for the modern age.” However, this is unlikely to happen overnight.
He also said the small business rate relief holiday would be extended by another year to October 2012, at a cost of £370m.
He said the Government would also tackle the planning system. “We will expect all bodies involved in planning decisions to prioritise growth and jobs.” Cumbersome planning laws “stand in the way of new jobs” he added.
There was a renewed focus on environmental measures. Mr Osborne said green taxes will increase as a proportion of total tax revenue and he commits an extra £2bn to the Green Investment Bank, which will start work earlier than planned, in 2012. Meanwhile, the UK will become the first country in the world to introduce a carbon price floor for the power sector.
On pensions, Mr Osborne said he accepted Labour minister John Hutton’s report findings and revealed that he thought similar changes should be made to MPs' pensions. He said he wants a "single-tier pension" so people know what to expect, although it won't apply to current pensioners.
Several tax avoidance loopholes would be closed down. Mr Osborne said three forms of stamp duty land tax avoidance will be shut down, among other measures, which he says will raise £1bn a year.
The chancellor confirmed there would be a rise in the personal tax allowance, which had been widely mooted, and said 1.1m lower paid people have now been taken out of income tax altogether. And, he added, no one else would be pulled into the higher rate tax bracket as a result of the Budget.
The key points of Chancellor George Osborne's Budget
FUEL, CIGARETTE AND ALCOHOL DUTIES
Fuel duty to be cut by 1p per litre from 1800 GMT
Planned 4p per litre rise due in April to be delayed to 2012
Annual fuel duty escalator to be scrapped until 2015
VAT on fuel will not be reduced
No additional changes to alcohol duty rates
Tobacco duty rates up by 2% above inflation, duty regime to be reformed
No personal tax increases
Personal tax allowance to rise a further £630 to £8,015 in April 2012
Consultation on long-term plan to merge income tax and National Insurance
50% top rate of tax to remain but review of how much it raises
2011 growth forecast downgraded from 2.1% to 1.7%
2012 forecast also down from 2.6% to 2.5%
Inflation set to remain between 4% and 5% in 2011
Forecast borrowing of £146bn this year, £2.5bn lower than anticipated
Borrowing to fall to £122bn next year, dropping to £29bn by 2015-16
National debt forecast to be 60% of national income this year, up to 71% in 2012
OTHER TAXES AND ALLOWANCES
Council tax to be frozen or reduced this year in every English council
10% discount on inheritance tax for people leaving 10% of estate to charity
Rise in air passenger duty to be frozen this year
Private jet users to pay passenger duty for first time
Levy on so-called "non-doms" up to £50,000 for those resident in the UK for 12 years
Tax avoidance clampdown to raise £1bn this year
Support for families in the south-west of England with water bills
Government-backed shared equity scheme to help 10,000 first-time buyers
HELP FOR BUSINESS
Main rate of Corporation Tax to be cut by 2% in April, not 1% as previously planned
Bank levy to be adjusted so banks do not pay less tax as a result
43 tax reliefs to be scrapped as part of simplification of tax code
£350m of business regulation to be scrapped
No new regulation on firms with fewer than 10 staff for three years
Business rate relief holiday for small firms extended for another year
New rules to require planners to prioritise growth and jobs
£100m funding for science facilities
21 "enterprise zones" to be launched, backed by tax incentives
JOBS AND SKILLS
Funding for 12 further university technical colleges
40,000 new apprenticeships for young people out of work
Funding for 100,000 work experience placements
Accepts Hutton review of reform of public sector pension contributions
Long-term aim for £140 a week flat-rate state pension - not to apply to current pensioners
£100m for repairing potholes in England
£200m support for regional railways in England
£2bn extra funding for Green Investment Bank - to launch in 2012
Mr Osborne said Britain had practically the same interest rates as Germany - despite a huge Budget deficit. “This Budget confronts the hard truth that has been ignored for too long. Britain has lost ground and needs to catch up. We gambled on a debt-fuelled model of growth that failed. We simply can’t afford to go on like this: Britain has to earn its way in the modern world.”