Budget 2011
On Wednesday, 23 March 2011, the Chancellor George Osborne presented his Budget to the House of Commons, which included a number of measures designed to help small and medium-sized enterprises.
 

Fuel duty

George Osborne has announced he is scrapping the planned 1p increase in fuel duty, due in April, and reducing fuel duty by 1p (this came into effect at 6pm last night). The Government will implement a ‘fair fuel stabiliser' that increases tax on North Sea oil production when oil prices are high.
 

National Insurance Contributions

The 1% increase in employer and employee National Insurance Contributions will go ahead as planned on 6 April this year. In addition, the National Insurance Contributions Bill, which was passed on Tuesday in Parliament, introduces some changes to the NIC thresholds.
 
The primary and secondary thresholds will increase by £24 and £21 per week above the Retail Price Index. The upper earning and profits limits for NICs will be reduced by £1,400 so that they remain aligned to the higher rate threshold.
 

Enterprise Investment Scheme relief

Enterprise Investment Scheme relief aims to encourage personal investment in small and medium-sized businesses. Under existing rules, companies with no more than 50 employees and who met a £7 million pre-money gross asset test could qualify for Venture Capital Trust and Enterprise Investment Scheme relief. But, from April 2012, this will now increase to companies with up to 250 employees and gross assets to £15 million.
 
In addition, companies will also be to take up to £10 million investment a year. Income tax relief on the Enterprise Investment Scheme will also increase from 20% to 30% in April 2011.
 

Small Business Rate Relief

In last year's Budget, the previous Government announced a temporary increase in Small Business Rate Relief. From 1 October 2010 to 30 September 2011, eligible businesses with a rateable value of up to £6,000 are entitled to 100% relief on their bill. If your rateable value is between £6,001 and £12,000, you are entitled to relief on a sliding scale between 100% and 0%. Yesterday, the Chancellor announced that this temporary increase will be extended for a further year.
 

Enterprise zones

The Government will create 21 ‘enterprise zones' across England within the following areas: Birmingham and Solihull, Leeds (city region), Sheffield (city region),  Liverpool (city region), Greater Manchester, West of England, Tees Valley, North Eastern, the Black Country, Derby and Derbyshire, Nottingham and Nottinghamshire, and London. The Enterprise Zones aim to boost economic activity in certain areas of the country and businesses located there will benefit from reductions in business rates, simplified planning and superfast broadband.
 

NIC and PAYE merger

In order to simplify the tax system, the Government will consult on merging National Insurance Contributions and Income Tax. This is unlikely to happen for quite a few years but if you would like us to feed your views on this into the consultation, please join our employment law member panel.
 

Health and safety

George Osborne has confirmed that the proposals made as part of Lord Young's recent health and safety review will be implemented. The plans include measures to simplify the risk assessment procedure for low hazard workplaces such as offices, classrooms and shops.
 

Red tape

The Government will introduce a moratorium exempting microbusinesses (firms with fewer than 10 employees) and start-ups from new domestic regulation for three years from  1 April 2011. There will also be a review of all regulations affecting businesses with a view to removing burdensome red tape.
 

Research and development

The Government will increase the SME scheme rate of relief for research and development tax credits to 200% from April 2011 and 225% from April 2012. It also plans to simplify the schemes including removing the PAYE/NICs cap on the amount of payable credit that can be claimed, removing the minimum expenditure rules and allowing relief through the large company scheme for subcontracted activity which forms part of the wider research and development project.
 

Approved Mileage Allowance Payments (AMAPs)

From 6 April, AMAPs rates will rise to 45 pence per mile for the first 10,000 miles and 25 pence per mile thereafter. In addition to claiming AMAPs rates, an allowance for passenger payments currently in place for business employees, at 5 pence per passenger per mile, will be extended to volunteers.
 

Contact us

You may also wish to read our Budget press release which gives details of the Forum's position on all of the issues above and also provides further information on corporation tax, the VAT loophole and Community Investment Tax Relief.
 
For further details of any of the measures mentioned above, members can call our helpline on 0845 130 1722. Or, to have your say on how this year's Budget will affect your business, contact the Public Affairs team at  PublicAffairs@fpb.org.