The Chancellor will present his Budget to Parliament on 23rd March. The announcement is widely seen as a key part of the government’s efforts to return the country to growth – and it could well have major implications for business owners.
Very few people know what the Chancellor is going to say until he says it. But we can make an educated guess about the sorts of things he might announce. Here are a few of the key areas that are likely to be addressed in the Budget.
There are a few things we already know for sure when it comes to business tax. We know, for example, that the Chancellor will announce the creation (or rather the reincarnation) of so-called ‘enterprise zones’ intended to help businesses set up and develop in disadvantaged areas of the UK. In their original incarnation, businesses established in theses zones enjoyed very favourable tax treatment and, while it may well be that the benefits are scaled back, it seems inevitable that some tax breaks will be offered.
It also seems likely that the headline rate of Corporation Tax will be reduced by 1 per cent to 26 per cent, from 1 April 2012. It is also thought that the Small Profits Rate may be reduced, to 20 per cent. While this might not sounds like a big change, it could make life rather more affordable for small businesses.
The government has come under pressure to extend the National Insurance Contributions holiday. While it is still unclear what changes (if any) are made to the scheme, it could well be that the Chancellor decides to expand it to start-ups in every part of the country. In addition, it could be extended to include Class 4 National Insurance Contributions.
There have also been rumblings about the much-derided planned increase in fuel duty. It is not inconceivable that the 1 pence increase could be deferred. It was originally intended to come into force next month, but it could now be delayed. The government has also been talking about introducing a ‘fair fuel stabiliser’ to help keep fuel prices even. But the plan hasn’t been properly thought through; the potential cost to the Treasury is huge, and the practical problems associated with developing the scheme mean that it seems fairly unlikely that we will see it announced this month.
The burden of red tape is a major gripe for businesses of every size. We have already been told that the government is considering a major overhaul of the planning system in order to make it easier for businesses to expand. Although these measures will not be announced in the Budget, they will form part of the Growth Review that is set to be unveiled on the same day.
There has also been a suggestion that the much-criticised IR35 regime could be in line for an overhaul. While it is not clear what form any changes might take, it is presumed that the Chancellor will explain which of the proposals made by the Office of Tax Simplification last week will be followed up.
The government has already made clear that it wants to see the 50p tax rate scrapped – but it has also said that it cannot afford to do it right now. So, while it is unlikely that the Chancellor will announce an imminent reduction of the rate, he could conceivably give an indication of when the government intends to get rid of it.
The income tax personal allowance may also receive some attention from the Chancellor. The £10,000 personal allowance was a key part of the coalition agreement, and it seems likely that the personal allowance (which was increased at the last Budget) could rise in order to continue its progress towards this figure.
We could well also see some movement on Inheritance Tax – one of the Tories’ pet hates. While there will almost certainly not be any actual changes to the regime in the announcement, it seems quite likely that the Chancellor will announce a review of the tax to take place over the next year or so.
There may also be an extension of the tax amnesties that are already in place. The Plumbers Tax Safe Plan (rather disingenuously named, given that it already applies to many more trades than just plumbers) could well be expanded in an effort to increase the flow of cash into the Treasury’s coffers.
Of course, trying to predict the Chancellor’s moves is a very unscientific art. You can, however, get full coverage of the Budget here on Simply Business, where we will be live-blogging the announcement and discussing its implications throughout the day.