Tax changes
At the last Budget the Government cut the main rate of corporation
tax to 26%, and it will fall by a further 1% each year until
2014, when it will reach 23%.
Changes to the tax rules with immediate effect will ensure the
amount of tax relief given to employers making asset-backed pension
contributions to registered pension schemes accurately reflects
the amount of payments made, and does not give rise to unintended
excess relief.
The climate change levy discount on electricity for climate
change agreement participants available from 1 April 2013 will
be increased to 90%.
As announced, the Government will remove the VAT relief for
low value goods (below £15) sent to the UK from the Channel
Islands with effect from 1 April 2012.
Enterprise Zones
Enterprise Zones in six assisted areas – Black Country,
Humber, Liverpool, North Eastern, Sheffield, and Tees Valley – will
qualify for enhanced capital allowances. In these areas, 100%
allowances will be available for plant and machinery investment
incurred between April 2012 and March 2017. Discussions continue
with the devolved administrations regarding enhanced capital
allowances in their Enterprise Zones.
Venture Capital Schemes
The Chancellor announced a new Seed Enterprise Investment Scheme
(SEIS) to encourage investment in new start-up companies. SEIS
will provide income tax relief of 50% for individuals who invest
in shares in qualifying companies, with an annual investment
limit for individuals of £100,000 and a cumulative investment
limit for companies of £150,000.
In addition, the scheme will offer a capital gains tax ‘holiday’ for
investments made. This will provide for a capital gains tax exemption
on gains realised on disposal of an asset in 2012/13 and invested
through SEIS in the same year.
The Enterprise Investment Scheme (EIS) will be simplified by
relaxing the connected person rules and the definition of shares
that qualify for relief. At the same time the focus of the scheme
will be tightened by the introduction of a new test to exclude
companies set up for the purpose of accessing relief, exclude
acquisition of shares in another company and exclude investment
in Feed-in-Tariffs businesses.
In addition to these changes, the Government will remove the £1m
investment limit per company for Venture Capital Trusts (VCTs)
to reduce the administrative burdens of the scheme.
The Government had already announced that from 6 April 2012
the employee limit for both EIS and VCT purposes will be increased
to fewer than 250 employees (currently 50), while the gross asset
limit will rise to £15m before the investment.
In addition, the maximum annual amount that can be invested
in a company will increase to £10m and the maximum annual
amount that an individual can invest under the EIS will rise
to £1m.
Business rates
The Government will extend the small business rate relief ‘holiday’ for
a further six months from 1 October 2012 and give businesses
the opportunity to defer 60% of the increase in their 2012/13
business rate bills as a result of the Retail Prices Index uprating,
to be repaid equally across the following two years.
Employment regulation
The qualifying period for unfair dismissal claims is to be increased
from one year to two years from April 2012 to help address employers’ fears
about the risks of taking on a new member of staff. The Government
will consult on the level of fees, to be introduced for individuals
who want to bring cases to employment tribunals.
Planning law
The Government will:
- review planning appeals procedures, seeking to make the process
faster and more transparent, improve consistency and increase
certainty of decision timescales. Proposals will be brought forward
for implementation in summer 2012
- consult on a proposal to allow the reconsideration of those
planning obligations agreed prior to April 2010 where development
is stalled; and
- consult on proposals to allow existing agricultural
buildings to be used for other business purposes such as
offices, leisure and retail space, to make it easier for rural
businesses
to find the premises they need to expand.
Credit easing
The Government announced a package of up to £21bn of credit
easing measures to support smaller and medium-sized businesses,
comprising:
a National Loan Guarantee Scheme. Up to £20bn of guarantees
for bank funding will be made available over two years. This
will allow banks to offer lower cost lending to smaller businesses,
subject to state aid approval; and
making available an initial £1bn through a Business Finance
Partnership, which will invest in smaller and medium-sized
businesses in the UK through non-bank channels.
Innovation
The Government has announced that it will:
- invest an additional £75m in supporting technology-based
SMEs to develop, demonstrate and commercialise new products
and services
- invest an additional £200m in science, including an £80m
investment in the Institute for Animal Health and £25m
for large-scale technology demonstrators; and
- ntroduce an ‘above the line’ tax credit in 2013
to encourage research and development (R&D) activity
by larger companies.
The Government will consult on the detail at Budget 2012
and aims to ensure that SME R&D incentives are not
reduced as a result of this change. This builds on measures
at Budget 2011 to increase the R&D tax credits
for SMEs.
In December 2011 the Prime Minister will set out the
Government’s
strategy to support the life sciences work of universities,
the NHS, private investors and businesses, to attract
and develop talent, and improve incentives.
Following consultation over summer 2011, the Government
will publish on 6 December 2011 further details
of the Patent Box and its reform of the Controlled Foreign
Company
rules and R&D tax credits.
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