• Cutting National Insurance Contributions for employers by raising the threshold by £21 per week from April 2011
• An increase in VAT from 17.5% to 20% from 4th January 2011; the flat rate scheme will be adjusted accordingly
• A reduction in the main rate of corporation tax to 24% over four years
• A reduction in the small profits rate of corporation tax to 20% from April 2011
• An increase in the personal allowance for basic rate taxpayers under 65 of £1,000 from April 2011
• An increase in the Enterprise Finance Guarantee (EFG) fund for small businesses finding it difficult to access finance from conventional sources
• Reductions in capital allowances, although the Chancellor said that manufacturers should pay less tax overall
• An increase in capital gains tax to 28% for higher rate taxpayers, with a rise in the Entrepreneurs’ Relief lifetime limit from £2m to £5m.

In addition, forthcoming measures include: 

• A review of small business taxation
• All central government tenders to be made available for free online
• A consultation to review tax on intellectual property, research and development tax credits and the proposals by the Dyson review promoting research and innovation
• Temporary legislation to extend small business rate relief from October 2010

In a blow to East of England firms, the ‘Greater South East’ is to be excluded from further measures to stimulate enterprise and job creation by exempting new businesses from paying National Insurance Contributions on their first ten employees, up to an allowance of £5,000.

Despite the increase in VAT, retailers have been spared further duty increases in alcohol, tobacco and fuel duties. Current zero-rated goods, including food, books and children’s clothes, remain unaffected. Fears proved unfounded that HMRC’s Time to Pay scheme might be scraped, so businesses can still defer and spread their tax and VAT liabilities in certain circumstances.

‘Open for business’

In his budget speech, the Chancellor highlighted the need for economic recovery to be driven by the private sector. He noted that, to be able to do this, businesses need the right environment to stimulate and maintain growth.

So, businesses finding it difficult to raise finance through conventional channels could benefit from the Chancellor’s £200m increase in funding for the Enterprise Finance Guarantee (EFG) scheme. This funding will be available until 31 March 2011.

Lower costs for employers

For businesses with employees, the measures introduced to increase the threshold for National Insurance Contributions (NICs) will reduce business overheads, whilst the rise in personal allowances will benefit employees who are lower-rate taxpayers. Both these measures come into effect from April 2011.

However, firms in the six counties of the East of England have been barred from plans to exempt new start-ups from paying NICs on their first ten employees up to an allowance of £5,000. Further regional development plans will be announced in due course.

Full details on how the Budget impacts on individuals can be found on the DirectGov website on this link  

Visit the HM Treasury website for the full Budget documents on this link 

For more information about how the Budget will impact on your business, visit the Business Link website on this link.