Budget 2014: What does it mean for your small business?
All the key points affecting small businesses and start-ups from Osborne’s economic plan to support the “movers, doers and savers”…
Delivering a speech which focused on getting “Britain exporting more, selling more, manufacturing more and saving more”, chancellor of the exchequer George Osborne outlined several key measures to help maintain a “resilient” economy.
Startups looks into the 2014 Budget Report to reveal the plans set to impact upon owners of start-ups, small and growth businesses.
Urging that “Britain has to up its game with exports”, the government will be taking further action to support businesses selling abroad and will be increasing access to finance. It plans to overhaul the UK Export Finance’s (UKEF) direct lending programme by doubling available funding to £3bn and cutting interest rates to the lowest permitted levels to provide “competitive financing” in order to help UK companies win international trade contracts and expand overseas.
Recognising a “need for Britain to support its manufacturers” with manufacturing companies “producing more than half of the UK’s exports”, Obsorne unveiled an energy bill package which will look to reduce the cost of energy policy for businesses, particularly in the manufacturing sector, by up to £7bn by 2018-2019.
The government will also be investing in new sources of energy to increase its renewable generation.
Grants for small businesses
The government plans to build on the growth of its Apprenticeship Grants for Employers (AGE) scheme and help more young people into employment, by providing an extra £85m in both 2014-2015 and 2015-16 for over 100,000 grants to business owners.
Seed Enterprise Investment Scheme (SEIS)
In order to ensure that venture capital schemes and new investors continue to back small and growing businesses, the government will make the Seed Enterprise Investment Scheme (SEIS) and the capital gains tax 50% reinvestment relief permanent.
Research and Development (R&D)
To support start-ups and early-stage companies to invest in research and development, the government will raise the rate of the R&D tax credit payable to loss making small and medium-sized companies from 11% to 14.5% from April 2014. Over the next five years, it is estimated that this increase will support £1.3bn of investment in innovation.
The planned fuel duty rise for September has been cancelled and the freeze on fuel VAT will continue. According to Osborne the cost of petrol per litre is now “20p less than it would have been under the last government”.
To date the government’s business Enterprise Zones have created 7,500 jobs and attracted 1.2bn investment. The government intends to build on its success with plans to launch Northern Ireland’s first Enterprise Zone.
Not mentioned in Osborne’s actual speech but referenced in the Budget report, alternative finance is an area that government wants to look into. In a bid to encourage “better banking for businesses”, a consultation will be undertaken to match start-ups who are turned down for a traditional loan with alternative lenders.
Tax relief for social enterprises
The government is looking to encourage new investors to back social enterprises and is setting a rate of 30% income tax relief for its Social Investment Tax Relief. Eligible social enterprises will be able to receive maximum investment of £290,000 over a three year period.