Budget 2013: Corporation tax cut as growth halved
Income tax threshold raised to £10,000 and corporation tax cut to 20% among measures in 2013 Budget as growth forecast halved
ECONOMIC GROWTH this year will only be half of what was previously forecast, the chancellor admitted in his Budget speech, but insisted that the UK would not slip into a triple-dip recession.
George Osborne said growth in 2013 would be 0.6% – down from the 1.2% he predicted in last year’s Autumn Statement and that growth would not return to forecasts until 2015.
Borrowing as share of GDP will fall from 7.4% in 2013/14 to 5% in 2015/16, while debt as a share of GDP is to increase from 75.9% in 2012/13 to 85.6% in 2016/17.
The chancellor announced a number plans to boost businesses, including a pledge to cut corporation tax to 20% from April 2015, a new employment allowance to cut companies’ national insurance bills by £2,000 and an extension to the capital gains tax holiday as part of the government’s Seed Enterprise Investment Scheme.
Under the extension, any investors in the scheme – which offers 50% income tax relief on investments made into small, early-stage companies and – making capital gains in 2013-14 will receive a 50 per cent capital gains tax relief when they reinvest those gains into seed companies in either 2013-14 or 2014-15.
Linda Mounter, tax manager at BDO, says CGT exemption is “really welcome” and would “encourage people to make investments.”
Additionally, Osborne announced that stamp duty on AIM companies – smaller listed stock market companies – is to be axed, and that the rate of the above the line R&D credit would be raised to 10%. Among other initiatives aimed at businesses, the chancellor promised to double to £10,000 the size of loans that employers can offer tax-free to pay for things such as season tickets for commuters.
Osborne also hastened plans to increase the threshold at which individuals begin to pay income tax to £10,000 a year sooner than expected, and announced the surprise move to scrap September’s 3p rise in fuel duty.
Diarmuid MacDougall, who heads up PwC’s patent box and R&D teams said the hike in R&D credit was “fantastic news” for British business.
“This credit…will provide vital extra funding for businesses that may now be able to pursue projects that would otherwise have been abandoned,” he said.