Budget 2014 – Summary for small business owners

March 19, 2014

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.