OVERVIEW
- Chancellor sets out a fiscally neutral budget in the face of weakening growth
- Plan for growth will focus on tax, start ups, investment, exports, and the workforce
- Extension of short-life asset regime, a key EEF priority, recognises the cost of investment
- Higher R&D tax credit for SMEs potentially supplemented with further action in May
- High carbon price floor to push electricity prices higher than competitors’
KEY MEASURES
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Plan for Growth |
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The Chancellor sets out four Parliament-long ambitions to lead to stronger, more balanced, and more sustainable growth. These are to make the UK the most competitive tax location in the G20; make the UK the best place in Europe to start, finance, and grow business; encourage investment and exports; and create a more educated and flexible workforce |
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Increase in energy taxation |
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The carbon price floor will be introduced with a starting level of £16/tonne of CO2 in 2013 moving to a target of £30/tonne in 2020. The CCA discount has been raised back up to 80%. |
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Extension of Short-Life Asset Regime |
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The Short Life Asset Regime will be extended doubling the short life period to eight years |
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R&D tax credit raised for SMEs |
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The rate of the R&D tax credit will be raised for SMEs to 200% from April 2011 and 225% from April 2012. Further detail on simplification and potential broadening of the qualifying definition to be discussed in May consultation. |
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Extension of the Enterprise Investment Scheme |
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The generosity, simplicity , and reach of the EIS has been extended with income tax relief increasing from 20% to 30%, doubles the amount an individual can invest, increases by 400% the amount that can be invested in one company, and increases the size of eligible companies. |
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Regulation fight to go to Brussels |
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£350 million worth of regulations removed, benchmarks to reduce regulations for small firms and employment regulations, and the PM to rally Europe to reduce Brussels regulation. |
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Corporation tax cuts further and faster |
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The corporation tax cuts signalled in the Emergency Budget last year will be further and faster with the 1p reduction in April being increased to 2p – the other 1p reductions stay in place. |
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Consultation on NICs/PAYE |
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The Chancellor will consult on how income tax currently operates with a view to simplifying and potentially merging NICs and PAYE – but without increasing taxes for anyone. |
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Apprenticeships |
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40,000 new apprenticeships for the young unemployed people and 10,000 new high-level apprenticeships to be funded over the parliament |
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Green Investment Bank |
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Capitalisation of the Green Investment Bank has been raised to £3 billion and it will be able to borrow more from capital markets from 2015 onwards. |
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Fair Fuel Stabiliser |
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Fuel duty escalator has been scrapped for the Parliament. Planned inflation rises for April this year and April next are postponed until next summer and today there is a one-off 1p cut. |
> Download our full EEF Budget Briefing
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