Following Chancellor George Osborne’s Budget statement on the 20th March 2013, Howett Thorpe reflects and reviews the impact the Budget will have on UK business and the employment market.
Will this Budget successfully boost the economy by providing the required tax cuts for UK business in the drive to create jobs and deliver lasting prosperity? … Or…. is it just ‘more of the same’ as stated by the Miliband camp?
Headline announcements for business included;
- Corporation tax main rate to reach 20% by 2015 (the joint lowest level in the G20).
- A new Employment Allowance, Giving businesses and charities entitlement to a £2000 per year employment allowance towards their employer National Insurance Contribution (NICs) bill, from April 2014. Reducing the cost of hiring staff for smaller businesses and exempting an estimated 450,000 small businesses from paying any national insurance contributions.
- Increasing capital spending plans by £3bllion a year from 2015-16, funded through reductions in current spending.
- Increase in the annual investment allowance (AIA) limit for a period of 2 years allowing small business to deduct 100% cost of certain plant and new machinery purchases up to a new limit of 250k.
- Tax simplification for smaller business – Taxable benefits on a cash basis for smaller businesses introduced from the tax year 2013/2014 – only available to unincorporated businesses and requires election by the owner.
The Chancellor expressed concern that dealing with the deficit was taking ‘longer than hoped’, a concern also shared by our clients and candidates. The official figures present a gloomy few years ahead with one in five 16-24-years-olds currently out of work, the 2013 growth forecast cut from 1.2% to 0.6% and borrowing figures for this year rising to £114bn.
Despite the Gloomy and delayed growth forecast, Business has generally welcomed the 2013 Budget proposals and the government’s commitment to boost spend on infrastructure and fiscal support through new employments allowances and the reduction in corporation tax. However the Chancellor has been criticized by the recruitment industry for not introducing any new policies surrounding youth unemployment and the increasing lack of skills being nurtured in the UK.
Investment in core employability skills is undoubtedly a keystone to support businesses in their drive to develop and support the country to secure lasting prosperity and commercial competitiveness in the years ahead. Only with this investment alongside this years ’head on’ tackling of fiscal and economic issues for UK business will we fully deliver lasting prosperity.
For general employment and market advice please contact us on 01252 718777.