UK corporation tax is set to fall by 1 per cent to 20 per cent in April 2015. This follows a promise in last year’s Autumn Statement to cut it to 21 per cent.
The Government is also introducing a new employment allowance, which will take the first £2000 off the employer National Insurance bill of every company in the UK.
Osborne says this is particularly targeted at SMEs, and will mean around 450 000 small businesses will pay no employer’s National Insurance at all.
Unveiling the Budget, Osborne said, ‘This Government is taking tax off jobs. He described the measures as ‘a budget for our aspiration nation’.
Osborne also promised tax reliefs this year for ‘creative industries like high-end television and animation with new support for our world-class visual-effects sector.’ Meanwhile the ceramics industry will be exempt from the Climate Change Levy.
And he pledged to increase by fivefold the value of Government procurement spending through the Small Business Research Initiative.
The rate of above-the-line research and development credit is being increased to 10 per cent, while corporation tax on profits from patents will be set at just 10 per cent.
Government department budgets are set to be cut by 1 per cent, and money saved will be used in infrastructure projects, which will be boosted by £3 billion a year from 2015.
Osborne cited projects such as the redevelopment of Battersea Power Station and said he was aiming to give the UK ‘the fastest broadband network in Europe’.
He said, ‘By investing in the economic arteries of this country we will get growth flowing to every part of it.’
Design industry reaction to the 2013 Budget
John Mathers, chief executive of the Design Council, says, ‘It is encouraging to see tax support for creative industry subsectors in the chancellor’s 2013 Budget statement. Design is a major creative industry player in its own right and provides a vital skillset underpinning all other creative industry sectors – the latest estimates of the value design brings to the economy stand at approximately 2.2 per cent of GDP or £33.5 billion spending annually.
‘Design also has major impacts beyond the creative industries. To touch two other key areas in Osborne’s budget: first, the need to find additional savings in the budgets of Whitehall Departments – design processes can generate new approaches to the development and delivery of public services and polices, particularly through a focus on those who will use services and the practical implementation of ideas.
‘Second, we welcome the additional £3 billion a year in infrastructure spending from 2015/16 – investments in infrastructure are a growth-driver but proper regard must be given to design in the development of infrastructure programmes.
‘Design support can ensure that infrastructure responds to context, addresses sustainability and makes a positive contribution to the local community and environment. The design-led strategy of the Olympics, which our Design Review programme supported, provides an excellent model for other large UK infrastructure projects such as broadband rollout and High Speed 2.’
Allison McSparron-Edwards, managing director of business development specialist Consultrix says, ‘I think that certain aspects of the budget will be of great benefit to the design industry, in particular SMEs.
‘The drop in National Insurance will allow design companies to employ more paid interns and graduates. Lending incentives, while we need to hear more details on this, will also help smaller businesses to grow and take opportunities otherwise unavailable to them.
‘More money to spend on talent and develop products will result in SMEs in the UK being able to grow and reach a wider audience and fulfil accounts that they may not have been able to do prior to this announcement.’
John Cridlow, director of the Confederation of British Industry, says, ‘An extra one penny cut in corporation tax will make the UK one of the most internationally competitive locations in which to do business.’
He adds, ‘Small and medium-sized businesses will be particularly encouraged that there was money available for the Chancellor to cut the jobs tax through a new employment allowance. We also need to remember the impact of business rates on the hard-pressed high street.’