News | UK Budget 2011
Wednesday 23rd March 2011
In the House of Commons today, George Osborne MP delivered his Budget 2011 which included a raft of measures he claimed would "make Britain the best place to start, run or grow a business in Europe".
Mr Osborne started by saying that the state currently accounts for roughly half of all UK income and it was time to redress the balance with a pro-business budget to support private sector growth. The Government wants to reduce our over-dependence on the City of London and recognise the importance of our skills and talents in manufacturing, technology and life sciences in other regions throughout the UK.
Tax and National Insurance
Mr Osborne plans to simplify the tax system to help reduce the administrative burden on small businesses and reward hard work and enterprise.
Working with the Office of Tax Simplification, he announced plans to merge Income Tax with National Insurance, although the consultation is likely to take a number of years to complete.
Apparently, Corporation Tax used to be the 3rd lowest in the world but is now the 6th highest and so from April it will fall by 2%, with a further 1% drop each year for the next 3yrs. Mr Osborne said this would make it lower than the US and send out a clear message to the rest of the world that "Britain is open for business".
Allaying any fears that this would benefit the banks, George Osborne said that he would be adjusting the Bank Levy next year to readjust the balance.
Measures To Help Small Business
On the subject of banks, Mr Osborne announced that he had agreed with them a 15% increase in credit to small businesses over the coming months.
Other measures to help small businesses include;
- A moratorium of 3yrs for small businesses in relation to any new domestic regulation.
- An increase in Income Tax Relief on the Enterprise Investment Scheme (EIS) from 20% to 30% in April.
Enterprise Zones
21 new Enterprise Zones are to be created in areas of the UK with the greatest need, but also the greatest potential. The first 10 are to be located in the following areas;
- Birmingham and Solihull
- Leeds City Region
- Sheffield City Region
- Liverpool City Region
- Greater Manchester
- West of England
- Tees Valley
- Tyneside
- The Black Country and
- Derby, Derbyshire, Nottingham and Nottinghamshire.
In addition, London will have its own Enterprise Zone - the exact location of which will be decided by the Mayor of London, Boris Johnson. The Government will also launch a competitive process for interested Local Enterprise Partnerships (LEPs) to establish the remaining 10 Enterprise Zones.
To encourage growth in these areas, the Government will introduce a 100% 'business rate discount' worth up to £275,000 over 5yrs for businesses moving into an Enterprise Zone. They will also encourage and support the rollout of superfast broadband in each of the Zones, with funding if necessary.
Furthermore, all business rates growth within the Zones for the next 25yrs will be 'retained and shared by the local authorities to help support their economic priorities'.
R&D and Skills Development
Following consultation with Sir James Dyson, the Government will increase the SME rate of R&D tax credit to 200% from April 2011, and then 225% from April 2012 which it hopes will help stimulate greater innovation in UK business.
In his Budget, Mr Osborne said that Britain's working age population has lower skills than both the US and France, which combined with the highest unemployment figure in 17yrs, makes for pretty grim reading.
To help turn this around and get more people into jobs and training, the Government is introducing the following measures;
- Funding for 24 new University Technical Colleges.
- 250,000 more apprenticeships over the next few years (including 40,000 for unemployed people).
- 100,000 people to benefit from the 'new work experience scheme' which will allows them to work for up to 8 weeks instead of the previous 2 weeks.
StartUp Britain
On Monday 28th March, the Prime Minister and Vince Cable MP will launch 'StartUp Britain' a new body to help people start and grow a business which the Shell LiveWIRE team looks forward to learning more about in the coming weeks and months.
Find Out More
To read the 2011 Budget in full, visit the HM Treasury website.
You can also read what young entrepreneurs are saying about the budget on our Discussion Forum under the special UK Budget 2011 thread.
