25 June 2010

 
Key Announcements from the Emergency Budget:

The Social Enterprise Coalition would like to highlight a number of key announcements made that are particularly relevant to the Social Enterprise sector:

Government Spending Cuts:

• The chancellor proposes extra spending cuts of £30bn by 2014/15. Government departments will face reductions of £17bn by 2014/15, an average of 25% over four years (not for health or international aid).

Start-up businesses and enterprise

• There was an increase in entrepreneurs' relief from capital gains tax from £2m of gains to £5m of gains. The small company's rate of corporation tax is to be reduced to 20%.
• Businesses starting up outside London, the south-east or east - in those parts of the country the government feels are hardest hit by public sector cuts - will not be required to payemployer national insurance contributions of up to £5,000, for each of the first 10 employees recruited. "In all, a nod to entrepreneurs to show they are still appreciated," said Patrick Stevens, tax partner at Ernst & Young.
• The Federation of Small Businesses welcomed the extension of the Enterprise Finance Guarantee to help small companies struggling to access loans. However, it expressed concern that rises in employer national insurance contributions were not completely reversed and warned the VAT rise would hurt smaller companies who have to pass it on.

Welfare and Pensions:

• Welfare measures to save £11bn by 2014 include a three year freeze on child benefit and a £1.8bn a year reduction in housing benefits. Benefits and tax credits will be linked to the Consumer Prices Index rather than the Retail Prices Index. This excludes pensions.
• The link between basic state pensions and earnings will be restored.

Taxation:

• Key taxation measures include a rise in VAT to 20%, a rise in capital gains tax to 28% for high earners and a £21 a week rise in the National Insurance threshold, while corporation tax will fall to 24% over four years.
• The income tax personal allowance will rise by £1,000, which is expected to mean that an additional 880,000 people will no longer pay income tax.

Members Feedback on the Emergency Budget - Impact on SEC Members

The Emergency Budget was described by the Chancellor as "unavoidable" and "tough but fair." However the Rt Hon Harriet Harman MP, Acting Leader of the Labour Party, called the Budget "reckless" and said it would lead to thousands losing their jobs.

What do you think?

We recognise that these are difficult times for our members and are keen to find out the policy changes you want prioritised that would most help your organisation. Please e-mail policy@socialenterprise.org.uk with your thoughts and suggestions.

 

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