The Budget 2014: positive news for business owners
- Entrepreneurs’ Relief maintained
- Stimulus for key SME industries – manufacturing and house building
- Reduction in business rates
- Small company reliefs extended
Today’s budget statement contained some encouraging news for business owners both large and small. The Chancellor’s introductory remarks centred on 2013’s strong growth figures, which saw the economy grow by three times the amount projected at the Autumn Statement.
The Chancellor was keen to attribute this growth to the Coalition’s economic plan, which aims to make the UK a more resilient economy. Osborne also underlined the Office for Budget Responsibility’s decision to upgrade its 2014 outlook for UK growth from 2.4% to 2.7%. In addition to this, the Chancellor was able to lay claim to strong jobs figures, with 1.3 million more people in work than at the time of the last Budget, and a 24% fall in the benefit claimant count.
Measures to benefit UK businesses will undoubtedly be welcome, including a reduction in business rates, and an extension of small company reliefs. British firms will benefit from measures such as a doubling of the annual investment allowance (AIA) to £500,000 a year for investments in new plant and machinery. This will be welcomed by larger firms alongside the planned Corporation Tax reduction from 23% to 21% for those companies declaring profits in excess of £1.5m.
Shares in UK building companies rose as markets reacted to an announcement of an extension to the popular Help to Buy scheme to 2020, which has stimulated demand in the residential property market. House builders were also buoyed by the announcement of a £0.5bn finance package to assist smaller house building firms.
Ultimately, lobbyists for the SME business community, such as the Confederation of British Industry (CBI), will undoubtedly criticise the absence of measures to encourage more competition in the banking industry and to increase access to alternative sources of finance for embattled small firms.
For deal makers, the Chancellor’s decision to preserve Entrepreneurs’ Relief, which reduces the amount of the Capital Gains Tax (CGT) on the disposal of qualifying business assets, means that vendors can continue to benefit from this crucial relief as applied to the sale of company shares.