Press Releases

March 2011

Budget 2011 – the ‘Budget for Growth’

South West based firm of chartered accountants, Milsted Langdon, is advising clients to look at the finer details of this year’s Budget and the provisions that have been made to fuel growth in businesses, to endure jobs for the future and to encourage enterprise across the UK.

Chancellor of the Exchequer George Osborne billed his second budget as his “Budget for growth”, declaring that the year ahead would be focused on “reforming the nation’s economy.”

His main ambitions, he said, were to promote Britain as the best place to do business in Europe, declaring that “Britain is open for business.” Measures would also be set in stone to ease the economic burden on businesses and families.

The Chancellor revealed that he now expects Britain's economy to grow at a slower rate than previously expected this year, with the Office for Budgetary Responsibility cutting its growth forecast for 2011 from 2.1% to 1.7%.

A fundamental feature of his plan to reform the economy is to encourage businesses to be built-up and sustained in the UK. Outlining measures aimed at stimulating growth in business, the Chancellor acknowledged that small businesses had been a victim of the economic crisis.

Enterprise will be boosted in the UK by the launch of twenty one new “enterprise zones”, which will be backed by tax incentives. Unemployment rates were targeted by the initiation of 40,000 new apprenticeships being created for unemployed people along with 100,000 work experience placements.

Osborne also set out measures that will aim to help start-up businesses in the UK, with entrepreneurs’ relief being doubled from £5 million to £10 million from April 2011. Capital allowances will also be doubled from four years to eight years in a bid to encourage more investment in new equipment.

Focusing his attention onto UK businesses, the Chancellor outlined plans to cut the main corporation tax rate by two per cent from April 2011, which is more than the one per cent previously announced. The Bank Levy rate is to be adjusted next year to offset the effect of corporation tax reductions on banks.

There was a boost for small firms, with a moratorium on new regulation for firms with fewer than 10 staff for three years. The business rate relief holiday for small firms will also be extended by another year.

Continuing with the theme of aiding SMEs, Osborne also announced that Research and Development tax credits for small businesses will be raised to 200 per cent this year.

Tax simplification also played a leading role in the Budget, with Osborne acknowledging that taxes should be “efficient” and “support growth”.  Forty three tax reliefs will be scrapped by the Chancellor following recommendations from the Office of Tax Simplification.

Tax avoidance is set to be clamped down on, with three forms of Stamp Duty Land Tax loopholes being among those closed by the Treasury in a move expected to raise £1 billion each year. The Chancellor also said that capital allowances would be “tightened” to “shut down open abuses.”

The Chancellor tackled the burden of fuel costs on families by announcing a surprise cut to fuel duty by 1p per litre, which will be implemented from 6pm on 23 March. The planned 4p per litre rise due in April will be delayed until 2012.

Osborne also set out measures that would “dramatically” simplify Gift Aid, with an introduction of an online filing system in 2013. To encourage people to leave 10 per cent of their estate to charity, the Chancellor said he would reduce the inheritance tax levied on the estates of those who do from 40 per cent to 36 percent.  

Simon Denton, partner at Milsted Langdon, said: “It is encouraging to hear that George Osborne wants to promote Britain as the best place to do business in Europe. We may currently be far from that but the new measures outlined by the Chancellor today will hopefully encourage start-ups and benefit smaller businesses. 

“Small to medium businesses have had a tough couple of years and it is encouraging to see that the Government are making moves to ensure there are some positives ahead.”

For further advice about the Budget, contact Milsted Langdon on 0117 945 2500 or visit www.milsted-langdon.co.uk.