However experts are warning that there could be nasty surprises for Limited Liability Partnerships, those companies set up in a way where the partners of a business are treated as self employed, and bear limited personal responsibility for the company in the case of, for example, bankruptcy.
LLPs work well for small creative businesses as they offer an alternative to being set up as a limited company or partnership.
The Government seems to be unhappy with the way some LLPs have been operated, particularly around perceived tax abuses where staff have been made partners even if they aren’t involved in the running of a business, so that they can be registered as self employed for tax purposes.
Mike Hayes, partner at accountants Kingston Smith W1 says that under the new rules ‘certain types of partner will be treated as employees rather than self employed.’
Hayes says, ‘The proposed changes to the tax rules for partnerships and LLPs will be implemented without any delay.
‘Design businesses that operate through LLPs or partnerships will need to review their structures to ensure that they have no unpleasant tax surprises.’
One of the more welcome announcements for design businesses was Osborne’s declaration that ‘Annual Investment Allowance will be doubled to £500,000 and extended to 2015.’
AIA is a capital allowance and means that tax relief can be given on 100 per cent of expenditure on new equipment for businesses.
Hayes says, ‘Increases in the 100 per cent write off of capital expenditure on plant and machinery – the Annual Investment Allowance – is attractive, particularly for larger businesses.
‘This will apply for expenditure between the 1 April 2014 and 31 December 2015 for companies and from 6 April 2014 for other businesses. The maximum amount is being doubled from £250,000 to £500,000.’
There was positive news for start up design businesses as Osborne announced that the Seed Enterprise Investment Scheme, which was initially introduced on a temporary basis for five years, is now to be made permanent.
SEIS is designed to help small fledgling companies raise equity finance by giving tax breaks to individual investors buying shares in the company.
Hayes says, ‘This is an attractive way for new businesses to raise much needed equity finance and it provides significant tax breaks for investors, such as 50 per cent income tax relief and a potentially capital gains tax free disposal.’
Osborne looked to make it clear he was getting behind manufacturing and export by saying, ‘More support for businesses; competitive finance; cheaper global flights. I want the message to go out that we are backing our exporters – so that wherever you are around the world you can’t fail to see: Made in Britain.’
His intention was set out with the ring fencing of a £3bn lending pot, which will now be available to UK companies doing business oversees. That puts it at twice what it was before the announcement.
Design Council policy advisor Camilla Buchanan sees export support as one of the budget’s key areas of engagement for design.
Buchanan says, ‘In export, design is a growing part of the creative industries sector and a lever for businesses in the wider economy; it accounted for £131m of services exported in 2011 (up from £122m in 2010).
Similarly, design is delivering against the government’s Industrial Strategy, and in our work we use it to drive supply chain innovation and science commercialisation. Research shows that for every £1 invested in design, businesses can expect over £20 in increased revenues.
If you’re looking to set up a business in an enterprise zone – of which there are many including Cornwall, Lancashire, London Royal Docks, and the Tees Valley – the business rate discounts in these areas are set to be extended for another three years.
Meanwhile a £7bn package has been put in place to cut energy bills for British manufacturers, a move which Osborne estimates will save the average sized manufacturing company £50,000 a year.
The Chancellor also announced a proposal to spend £42 million on the Alan Turing Institute.
Osborne recognised that Turing – who led vital codebreaking work during WWII but was persecuted for his sexuality – had received a posthumous Royal Pardon last year.
He said, ‘Now, in his honour, we will found the Alan Turning Institute to ensure Britain leads the way again in the use of big data and algorithm research.’