Budget 2012 summary - Key points for small businesses

By: Tom Whitney

Date: 21 March 2012

The Chancellor announced a raft of measures affecting small firms in the 2012 Budget, which he said “unashamedly backed business” so that firms could “innovate and be the best”.

Key points for small businesses at a glance are:

Enterprise and finance summary for the 2012 Budget

  • National Loan Guarantee scheme launched offering £20 billion guaranteed bank finance
  • The Enterprise Finance Guarantee scheme is to be expanded
  • UK export finance support is to be expanded
  • Detail of the Government’s national infrastructure plans — road, railway and air development initiatives — will be published this summer
  • £70 million development fund launched to attract new businesses and jobs in London
  • Government support for £150 million of tax increment financing, from 2013-14, to help local authorities promote local development
  • Enterprise Zones offering enhanced capital allowances for start-ups in the London Royal Docks Enterprise Zone, three Scottish Enterprise Zones in Irvine, Nigg and Dundee, and Deeside in North Wales
  • A Green Investment Bank to open next month
  • The Government is considering introducing Enterprise Loans to provide funds to young start-ups

Red tape cuts featured in the Budget

  • The previous Government’s carbon reduction commitment is overly bureaucratic and is therefore under review. If red tape can’t be cut, it will be replaced with a new scheme in the autumn
  • Details of the overhaul of planning regulations to be announced next week — planning regulations will be cut from 1,000 pages to 50 pages in the “biggest reduction in business red tape ever undertaken”
  • Sunday trading laws will be suspended for eight Sundays during the Olympics and Paralympics starting 22 July and ending 9 September
  • Firms will pay tax on the cash passing through their business for those with turnover up to the VAT threshold of £77,000 — providing simpler tax returns for up to three million small firms

Budget summary for research and tech support

  • £100 million support launched for new university research facilities
  • The Government is aiming to turn Britain into Europe’s technology centre — with corporation tax relief for video games, animation and high-end TV production industries
  • The Government has set a target for 90% of the UK to have superfast broadband. Funding has been announced to ensure ultrafast broadband in ten of UK’s largest cities and a further £50 million for broadband development in smaller cities

Tax rates

  • From 1 April 2012, the VAT registration threshold will be increased from £73,000 to £77,000 and the deregistration threshold from £71,000 to £75,000
  • Details of government plans to integrate income tax and National Insurance will be published shortly
  • VAT loopholes to be closed on fast food and other items — but exemptions remain for food, children’s clothes, newspapers and books
  • Taxes on profits from patents to be cut - a reduced 10 per cent rate of corporation tax will also apply to similar types of intellectual property from 2013
  • A new personal tax statement will be introduced in 2014-15, so people can see where their taxes are spent
  • Research and Development tax credits will be increased above the line from April 2013 with a minimum rate of 9.1% before tax - loss-making companies will also be able to claim
  • The Enterprise Management Scheme, which helps small firms recruit and retain staff, is to be reformed to help start-ups access the scheme — doubling the individual grant limit to £250,000
  • The main rate of corporation tax will be cut by an additional 1% from this April to 24%; and cut again to 23% in 2013 and 22% in 2014
  • Income tax — top rate of tax will be cut from 50p to 45p per pound from April 2013
  • Personal tax allowance raised to £9,205 from April 2013, making 24 million people £220 per year better off
  • From April 2013, small unincorporated businesses with receipts of up to £77,000 will be able to use a simpler, cash-based way of working out their tax