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As it happened: Budget 2014 - How will it affect your business?

21 min read

19 March 2014

Our coverage of today's Budget announcements, for which George Osborne is expected to have a few surprises up his sleeve. The Budget will begin at 12:30.

Key new announcements: 

The Seed Enterprise Investment Scheme (SEIS) will be made permanent

The Annual Investment Allowance (AIA) will be doubled and extended until 2015. 

Export finance available through UKEF will be doubled and UKTI will be given more resources. 

An increase in the value of R&D tax credits for loss-making SMEs. 

A freeze in fuel duty. 

A “£7bn package” to cut energy bills for manufacturers.

Osborne also confirmed that he would extend business rates relief and cut corporation tax to 20p. 

15:06

Phil Orford, chief exec of the Forum of Private Business, said:

“The headlines for business today are on energy policies and export. There are sizeable gains for UK manufacturers here in particular over the next few years. On export the Chancellor has thrown his weight behind getting more businesses exporting. 

“Our membership is confident about growth but much of that growth is UK based so we needed to see such a commitment, though we will continue to work with the Treasury and others to develop even healthier export subsidies for business.”

15:05

John Cridland, CBI director-general, said: “The Budget will put wind in the sails of business investment, especially for manufacturers.

“This was a make or break budget coming at a critical time in the recovery and the Chancellor has focussed his firepower on areas that have the potential to lock in growth.

“The CBI has pushed hard for this significant and much-needed energy package that will help keep manufacturing jobs in the UK, while underpinning vital investment in new energy.

“The doubling and extension of the Annual Investment Allowance, together with making the seed enterprise investment scheme permanent, will be a shot in the arm for many medium-sized businesses.

14:20

Our live coverage is winding down now – thanks for sticking with us. Check back with Real Business later for extended reaction and analysis. 

14:11

John Allan, national chairman of the Federation of Small Businesses, said: “Today’s Budget offered a clear signal for businesses to grow through the increased investment allowance, and with a focus on manufacturing. The £7 billion package to cut manufacturing energy bills will help create jobs and strengthen this key sector.

“That said all small businesses need to be bold and brave in 2014. Following today’s fall in unemployment, we know more than half of our members have aspirations to grow with many wanting to recruit and pay more too.”

On the increase in the Annual Invesment Allowance he added: “This is something we called for as part of rebalancing the economy. Recent FSB research showed that only two per cent of members knew about the recent increase to £250,000 – meaning most firms hadn’t taken advantage of it. This change should encourage greater investment, and key for Government now is to increase communication about the allowance to encourage take-up.”

14:03

Osborne also announced a new social investment relief. 

Matt Mead at Nesta Impact investments says: “By setting the tax relief for social investment at 30% this starts to level the playing field and makes investing in social enterprises as attractive as investing in small private companies. 

“While it’s shame that this will initially only apply to quite small levels of investment and be restricted to certain types of organisations the government are clearly committed to changing this over the next eighteen months. More importantly, this gives a clear signal that impact investing has huge potential as a market.”

13:59

Initial reaction from business groups has been broadly positive. 

British Chambers of Commerce director general John Longworth said:“Business wanted a Budget that was disciplined, focused, and geared toward the creation of wealth and jobs – and that’s what the Chancellor has delivered.

“With a huge confidence gap still separating employers from young job-seekers, we are very pleased to see the Chancellor heed our call to help firms take on and train tomorrow’s workforce.

“Overcoming that confidence gap means more investment in young people, more apprenticeships, and more jobs, which are critical with more than 900,000 16-to-24-year-olds still out of work.

“Osborne’s focus on investment, exports, house-building and economic resilience passes the business test. By making a better business environment his top priority, the Chancellor has recognised that successful and confident companies are the key to transforming Britain’s growing economic recovery into one that is felt in homes and on high streets.

“As with any Budget, there were some populist measures that were not at the top of business’s wish list. Luckily, these were far outweighed by considered measures to support business growth and wealth creation.”

13:54

On the Annual Investment Allowance extension, Vince McLoughlin, partner at tax advisers Russell New comments: “The Government needed to make it easier for small and medium sized businesses to access funding to maintain the perceived growth in the economy.

“Improvements to the Funding for Lending Scheme was required along with a commitment to a permanent increase in the Annual Investment Allowance (AIA), which allows businesses to claim capital allowances on certain purchases or investments in their business. 

“The temporary limit of £250,000 would have ended in December. Without an increase, then businesses would have been rushing to maximise the opportunities to use their AIA by planning the timing of their capital expenditure across the rest of this year.”

13:38

13:35

Ed Miliband is responding now, with a focus on Britain’s “falling living standards.”  

13:30

Osborne has finished delivering his speech – stick with us for all the reactions and analysis. 

13:29

Alistair Bingle, MD at Bishop’s Move, the UK’s largest family owned removals company, has responded to the freeze in Fuel Duty. 

He said: “The past 12 months has brought good news to businesses that rely on the roads on which to operate. The chancellor would have had one eye on the 2015 election.

“By announcing that he’s committed to the fuel duty freeze past the next election then this gives industries, such as haulage, the breathing space in which to plan and grow over the next 18 months and thus, create more job opportunities.

“However, there was an opportunity there to reduce fuel duty to further bolster the economy. With that said, this news is welcomed by our industry and, as the Help to Buy scheme supports more first time buyers onto the property ladder, we can now simply focus on getting Britain moving once more.”

13:22

The income tax personal allowance will rise from £10,000 to £10,500 in 2015, and the higher rate (40p) tax threshold will also be raised.

“I can also confirm today that the higher rate threshold will rise for the first time this Parliament, from £41,450 to £41,865 next month, and then by a further 1 per cent to £42,285 next year.”

13:16

Osborne will freeze duty on scotch, cider and cut it by 1p for beer to support pubs and manufacturers. 

13:15

“The fuel duty rise will not take place and it will be 20 per cent lower than it would have been under the plans of the last government”

The duty on bingo will also be cut to 10 per cent. 

13:11

Business investment:

Business rates discounts in Enterprise Zones will be extended for another three years. 

He will raise the rate of R&D tax credit for loss-making SMEs from 11 per cent to 14 and a half per cent. 

SEIS will be made permanent and Osborne will introduce a social investment tax relief of 30 per cent. 

The Annual Invesment Allowance will be doubled to £500k, extended until the end of 2015, so starting next month 99.8 per cent of businesses will pay no tax on investments, Osborne said. 

13:07

Osborne will extend apprenticeship grants for small businesses to create more than 100,000 new ones. 

Also announces formation of new Alan Turing Institute to boost British research. 

13:03

Exports

“We need our businesses to export more build more and manufacture more,” he says. 

“We’re expanding the reach and support that UKTI offers British businesses” 

“For decades the British government has been the last port of call when we should be backing businesses that export.”

He will double lending available for export finance to £3bn and cut interest by a third. 

“We are backing our exporters so that wherever you are around the world you cannot fail to see ‘Made in Britain'”

12:58

Osborne will continue to direct fines for LIBOR rigging to military and armed forces, and will also extend it to search and rescue charities, and the Scouting movement. 

He will also relieve inheritance tax on those who die in service of the country. 

12:56

Osborne will increase HMRC’s budget for tackling compliance, give it powers to collect debts from bank accounts, increase compliance checks and take action to curb misuse of EIS and VCT schemes, among other measures to clampdown on tax avoidance. 

12:50

Taxes in this budget will be down, but so will spending to lock in deficit reduction Osborne says. 

He will bring in a charter for budget responsibility this Autumn. 

12:47

One in thirty pound coins are counterfeit, costing businesses and families millions each year, says Osborne, hence the new £1 coin which will resemble the old thrupenny bit. 

12:46

Growth up, deficit set to half and a £42bn reduction in the interest we will have to pay on national debt, Osborne says. 

12:42

Before we came to office the deficit was 11 per cent, this year they say it will be 6.6 per cent, he says. 

12:41

The OBR predict earnings to grow faster than inflation this year and in every year forecast, he says.

12:40

The OBR expects Britain to reach the point where the economy is larger than at its previous peak six years ago, Osborne says. 

“There is no major economy in the world growing faster than Britain today.” 

12:39

Office of Budget Responsibility stats show economy grew by three times as much in 2013 than previously though, Osborne says.

The OBR now expects growth in 2014 of 2.7 per cent.  

12:34 

The economy is recovering faster than expected but there is still more to do be done, Osborne says. 

“If you are a maker, a saver or a doer, this Budget is for you.”

12:33 

The chancellor’s speech is about to begin. 

12:27

There are also hopes for a cut in Entrepreneurs’ Relief and new incentives to encourage equity investments. The British Venture Capital association said a relief cut would “send a clear message to entrepreneurs that if they make a success of their business in the UK, they deserve to keep the proceeds for them and their team.”

12:20

Business taxes are expected to be a key theme in today’s announcements. Corporation Tax is unlikely to be slashed any further, but we hope to see an announcement on freezing or reforming Business Rates and it’s been suggested that employer National Insurance Contributions could be waived for employees aged under 25. 

12:16

Exports: The Government’s target of doubling exports by 2020 has looked under threat of late, so there is anticipation the chancellor could announce increased support for UKTI, Britain’s export agency, and UK Export Finance, which offers financial help to exporting businesses. 

12:14

Jean Miller, CEO of crowdfunding platform investingzone.co.uk, says: “Support, guidance and funding for start-ups in fast-growth areas such as high-tech, aerospace and sustainable energy would help exciting British companies along the journey to listing on the AIM market.

“While the US is braced for a flood of tech IPOs this year and next, here in Britain we’re in danger of killing our burgeoning tech market by offering plenty of kind words but no real, tangible support. 

“The UK needs to become more than just an incubator for innovative ideas. We need to take business concepts, make them commercially viable, and then help them to grow with private investment from trusted sources

11:58

There’s talk of a potential doubling of the cap on business rates relief, which would mean more businesses would benefit. 

Richard New from law firm  Eversheds said: “Whilst the doubling of the cap would be welcomed by smaller traders as a stop gap before more sweeping reform, there will be serious reservations as to the significance of any impact it may have on the general market. 

“More thought needs to be given to addressing the concerns of the businesses in those areas of the country which are still struggling to pull themselves out of the recession as the one size fits all approach to relief simply isn’t working.”

11:44

The Federation of Small Businesses has issued a response to the new pound coin. 

FSB boss John Allan said:“Small firms who deal with low priced items are more likely to be effected by fake currency but we do have concerns about the extra costs of introducing a new pound coin. 

“For example, small firms may have to pay out to replace machinery. But, there’s no doubt counterfeit coins and notes can seriously damage small businesses. Not only are they worthless but a business could be prosecuted if it passes them on.”

11:28 

Former Dragon Doug Richard, founder of School for Startups, has called on the chancellor to focus on delivering a Budget for small businesses. 

Richard said: “If the Budget can provide support for challenger banks and energy providers, it will go a long way to helping out those with the courage to set up their own businesses.

“When you’re talking about the future of British business, education can’t be left out. We need to reconnect the classroom with the boardroom and make sure young people are leaving education with the skills that business needs.

“The Chancellor should make a commitment to look into the recommendations of Lord Young’s enterprise education review later this year. Let’s start a national discussion between business, government and teachers about how we can embed entrepreneurism as an equal path to livelihood.”

11:23

The Chancellor has left Downing Street sporting his iconic ministerial red box ahead of the announcement. 

11:20

The CBI has reiterated its calls for a number of measures from Osborne today, including an extension of the Annual Investment Allowance, incentives too boost equity investment and the Seed Enterprise Investment Scheme (SEIS) to be made permanent. Read more on the CBI’s budget submission here.   

11:07

Good news ahead of Osborne’s speech: Employment is at a five year high, with levels unemployment falling by 63,000 in the three months to January. 

10:35

One thing we do know is interesting though not especially groundbreaking – the pound coin is going to be redesigned with twelve sides, to discourage fraudsters. 

George Osborne tweeted this pic of a prototype of the new design. 

10:30

What do entrepreneurs want to see today? We asked readers to give us their perspective on what George Osborne should announce today. From support for the High Street to an extension of Entrepreneurs’ Relief, you can read what they told us here. 

10:15 

Welcome to our coverage of today’s Budget. Stick here for live updates on the key measures announced by George Osborne which will affect Britain’s small and medium businesses. 

Things have been quiet in the run-up to this year’s budget, with fewer leaks than usual, but the chancellor is expected to have kept a few tricks up his sleeve. 

The speech itself will kick off at 12:30 after Prime Minister’s Questions and our up-to-the-minute coverage will begin at 12 – you may need to refresh the page at this point. 

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