As expected, the 2013 Budget contained a smattering of changes to both personal and business finances, but George Osborne, laden with national debt (not to mention all those people calling him four-letter-words on Twitter), stopped short of announcing any showstoppers or financial giveaways.
Notable by its absence was legislation that will specifically benefit freelancers. For now, we’ll have to make do with being lumped into the broader ‘SME’ category, even though many of the business support measures announced won’t be of any use to the self-employed.
Personal Allowance increase
The Personal Allowance, which is the amount a UK employee can earn in a year before they start to pay income tax, will rise again in 2014. Currently standing at £8,105, the Personal Allowance will be jumping up to £9,440 at the beginning of the new tax year on 6 April (the biggest individual rise in history, don’t you know).
The chancellor announced the Personal Allowance will rise again, to £10,000, in April 2014. The £10,000 Personal Allowance has been a key promise of the Liberal Democrats since they came to power, so its inclusion in the 2013 Budget should go some way towards returning a smile to Nick Clegg’s face.
If you fall into the “small business” slice of the SME pie and are looking to staff up, this new scheme may be of use. The new Employee Allowance will allow new employers to forego up to £2,000 of Employer National Insurance Contributions, meaning you can take on your first member of staff and pay no employment tax at all if you’re paying them less than £22,000 per year.
If you want to take advantage of the Employee Allowance you don’t have long to wait either; it launches in April.
Tackling the avoiders
With some of the country’s largest companies openly laughing in the face of our corporate tax system, the government had to take anti-avoidance action at the 2013 Budget. Osborne specifically name-checked offshore employment intermediaries (umbrella companies to you and I) and schemes that abuse expense claims during his Budget speech, so we can assume such organisations are high on the list of targets. If you use an 'umbrella', now is probably a good time to check it's on-shore and above-board.
Shutting such schemes down, plus the introduction of a General Anti-Avoidance Rule (GAAR) will net the Treasury an extra £1 billion in tax revenue, apparently.
A hurry-up for card payments
The Chancellor announced he has “secured a commitment” from card payment processors (think Visa and Mastercard) to speed up SME card payments by “up the three days”, hopefully meaning many card transactions can be completed almost instantly. No word on what you have to do to qualify for these speedy new payments, but anything that improves cashflow can only be good, right?
Again a little lacking in detail, but the government has announced they will be doling out £30 million in £5,000 Growth Vouchers which, rather than serving as actual capital, can be exchanged for business services and advice. Services like accountancy, legal advice and marketing help are all included, so these vouchers could be a useful option for the new business owner.
The red tape challenge part 2
In 2011, the government launched a scheme called the Red Tape Challenge, which allowed individuals and businesses to nominate out-of-date or pointless legislation to be put out to pasture. The government claims the legislation done away with in the first round of the challenge has saved UK businesses £840 million, so they’re bringing the challenge back and expanding it to cover areas other than business law.
It’s tentatively scheduled to start this summer, so, if you’re a fan of deregulation, have your big red pen at the ready.
Alas, poor Gideon
The general consensus is that 2013 was not a vintage Budget, with many commentators concluding Osborne effectively painted himself into a fiscal corner in past years, leaving precious little room to manoeuvre this time out.
There is a whiff of pro-business about the measures included in the 2013 Budget, but with the stink of past failures such as Funding for Lending and Project Merlin lingering, it’s hard to get enthusiastic.
Jon Norris is a freelance writer and web editor for online accountancy firm Crunch
Image courtesy of Kevin Dooley, licensed under Creative Commons