New enterprise zone, cuts in corporation tax and increases in fuel duty have all been announced by Chancellor George Osborne in his budget today.
Osborne said the budget this year was set to: “reward working families” and make tax “more competitive” for businesses.
Some of the most important changes are outlined below.
- The chancellor confirmed that he plans to go ahead with the proposed 3ppl increase in fuel duty in August, which the RMI says could see diesel prices rising to as much as 150ppl by Easter and petrol reaching up to 155ppl by the summer.
- As part of a continuing drive to encourage new business growth in the UK the Chancellor announced new ‘enterprise zones’ in Scotland will be added to the 24 already in operation around England and Wales.
- From April 2013, a new cash basis for calculating tax for small unincorporated businesses with turnover up to the VAT registration threshold of £77,000 is proposed and will be consulted on.
- Corporation tax has been cut to 24 percent, with the Chancellor saying he wants the rate down to 22 percent by 2014
- The Chancellor praised Nissan for opening up valuable jobs in the automotive sector, and reaffirmed his commitment to opening up new job opportunities in British manufacturing.
A number of motoring groups have reacted to today’s announcements. More will be added to the comments below as statements are released.
RMI Petrol Chairman Brian Madderson said: “This is a deeply unpopular move by Government to force through a regressive fuel tax increase of this magnitude. It is unwelcome and unhelpful, not just to the cash strapped householder but to business and to the wider economy. Drivers in rural areas where cars are a necessity not a luxury will be particularly hard hit.”
RMI Director Sue Robinson commented: “The RMI is encouraged that the Government has offered assistance to smaller and medium sized businesses by reducing borrowing costs. However, this does not go far enough to address the issues that businesses are experiencing when trying to secure a loan in the first place.
However Robinson says that only larger businesses will benefit from a fall in corporation tax: “The news will be welcomed by our larger members. However our smaller members will be disappointed that there was no further reduction in the rate for smaller businesses. A fall in small business corporation tax would have greatly improved the financial situation of these businesses and potentially generate more employment opportunities.”
SMMT Chief Executive Paul Everitt says today’s budget will help to stimulate growth in the UK motor trade: “The Chancellor’s actions to improve R&D tax credits and develop a catapult for transport systems and future cities will help trigger substantial extra business investment in the years ahead.
“The UK automotive industry is attracting major levels of investment and creating real opportunities for engineering and manufacturing businesses.”
AA President Edmund King described the decision to keep the fuel duty increase as a ‘budget blow-out’ for consumers: “At a time of record prices at the pumps the August increase in duty is a budget blow-out which will force drivers off the road and could bring a summer of discontent for many.
We have heard much about tax allowances but the increase in fuel duty makes no allowance for car-dependent, rural and disabled drivers. Only last week the Prime Minister told American students that UK fuel prices would make them “faintâ€, yet the Government seems intent on inflicting more pain for no gain on drivers. Ironically, such a hike in duty doesn’t necessarily help government finances as people will cut spending at the pumps and in shops, and it could fuel inflation.”
Paul Davies, Head of Policy at the Institution of Engineering and Technology, said the budget lacked the holistic approach necessary for transport policy: “We are warning the government that all UK infrastructure needs to be designed as part of a single system of systems so that they support and enhance each other. This requires the sharing of key information and experience across sectors. “
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