What were the unexpected initiatives?

The 2010 Budget delivered some unexpected initiatives for entrepreneurs. The doubling of the Annual Investment Allowance will allow businesses to claim immediate tax relief of up to £100,000 each year for capital assets (excluding cars) purchased from April 2010. This will mean an additional saving of £10,500 for companies and up to £25,000 for unincorporated businesses. In a further concession, businesses that purchase new zero-emission goods vehicles from between April 2010 and April 2015 will benefit from a 100 per cent first year allowance.

 

The Chancellor highlighted the need to support the industries of the future. This regime should introduce a new 10 per cent corporate tax rate from April 2013 on income from patents registered in the UK. The video games industry will also receive a special tax relief following recommendations of the Digital Britain report.

A new Small Business Credit Adjudicator with statutory powers will review applications for finance that have been declined.

The government also introduced the housing of its £4bn suite of finance products for small and medium-sized businesses under one roof, which is now known as UK Finance for Growth. This aims to streamline the various initiatives previously announced. The fund will support businesses that need £2m- £10m in financing and are struggling to access capital through traditional routes.

A new Small Business Credit Adjudicator with statutory powers will review applications for finance that have been declined. Finally, there was a commitment to allow early stage businesses to get a larger slice of government expenditure by mandating a 15 per cent increase in the central government spending allocated to small and medium-sized enterprises – an estimated increase of £3bn.

The Business Payments Support Scheme which has been utilised by 200,000 businesses to date is now extended for a further five years.

On the investment side, the lifetime limit on Entrepreneur’s Relief – the rate at which capital gains tax is limited to 10 per cent – was doubled to £2m, providing a further £80,000 of relief (total £160,000) for entrepreneurs who meet the conditions. Despite speculation, the main rate of capital gains tax will not increase from its current level of 18 per cent.

The territorial rules contained within the Enterprise Investment Scheme, the Venture Capital Trust regime and the Enterprise Management Investment scheme has been relaxed. Previously, qualifying activities were to be ‘wholly or principally’ in the UK. Now a ‘permanent establishment’ in the UK will suffice.

Finally, there were a number of measures announced to combat tax avoidance and evasion, including higher penalties and even more disclosures. This follows the announcements made in the 2009 Budget Report about the new 50 per cent top rate of income tax and the 1 per cent increase (for employees and employers) in national insurance and the new pension restrictions.