Key Points of the Chancellor’s Budget
- Limit at which people start paying tax to be raised to £10,000 in 2014 – a year earlier than planned
TBOS COMMENT – With the personal allowance increasing it means more lower paid workers will not be taxed and should mean more money in your pocket each month. However the higher rate limit is decreasing which could cancel out some of the gains made to higher earners.
Help for Businesses
- Corporation tax to be cut by 1% to 20% in 2015
- New employment allowance to cut National Insurance bills cut by £2,000 for every firm
- 450,000 small firms will pay no employer National Insurance
- Government procurement from small firms to rise fivefold
- Tax relief for investment in social enterprises
- Stamp duty axed on shares traded on growth markets like Aim.
- Tax avoidance and evasion measures, including agreements with Isle of Man, Guernsey and Jersey, aimed at recouping £3bn in unpaid taxes
TBOS COMMENT – The £2,000 cut in National Insurance bills will mean that each business will be £166.66 better off each month on their wage bills from April 2013. We see this as a way of moving single person companies towards taking a higher salary (£22,400) and dividends due to the normalisation of the tax levels and no Employers NI due.
- 600,000 more jobs expected this year than at same time last year
- Claimant count to fall by 60,000
TBOS COMMENT – Great news for the recruitment industry although no comment on where these jobs will be.
Transport and Infrastructure
- An extra £15bn for new road, rail and construction projects by 2020, starting with £3bn in 2015-16
TBOS COMMENT – Good news for the construction and engineering industry and may open up further opportunities for recruiters.
Energy and the Environment
- Tax incentives for ultra low-emission cars
- Tax allowances for investment in shale gas
TBOS COMMENT – The government in 2015 will introduce 2 new emission bands meaning there are more cars available at a lower tax rate. The investment in the exploration of shale gas means there may be recruitment opportunities in this industry.
- Shared equity schemes extended, with interest-free loans for homebuyers up to 20% of value of new-build properties
- Bank guarantees to underpin £130bn of new mortgage lending for three years from 2014
TBOS COMMENT – This opens up the Shared equity scheme to anyone not just first time buyers and hopefully means that more funds will be available for mortgages. The dangers are that the more people who can get mortgages may push house prices up meaning less affordable housing. Also it is this type of lending (to people with very small deposits) was one of the main issues that caused the credit crunch in the first place.
Fuel, Alcohol and Cigarettes
- September’s 3p fuel duty rise scrapped
- April’s 3p rise in beer duty scrapped. Instead, beer duty to be cut by 1p
- Annual inflation +2% rise in beer duty to be ended but “duty escalator” to remain in place for wine, cider and spirits
- Cigarette duties unchanged – continuing to rise by inflation +5%
TBOS COMMENT – Although this sounds like good news for motorists it doesn’t mean that petrol prices will not increase only that the tax will not rise. It is good news for beer drinkers but not for smokers or wine and spirit drinkers. This means any meetings with TBOS will now only include beer, no spirits or wine allowed.
TBOS OVERALL BUDGET COMMENT – We believe that the budget was a good one for the recruitment industry as the savings on the NI and the increase in personal allowance will allow companies to consider hiring more staff. Also the investment in Shale Gas and the Rail/Road/Construction industry will mean more job opportunities for recruiters in those areas. Recruitment company owners will also notice their staff wage bills decrease allowing them to decide on if to take on more staff and the changes to the emission bands means company cars may become more appealing.