Autumn Statement 2013: Income tax relief for investors participating in social SMEs

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Investors buying shares or providing loans to firms carrying work for the social good are expected receive income tax relief when they invest and capital gains tax relief when they sell.

However the biggest boost for SMEs was the decision that, from April 2015, anyone hiring staff under 21 will not pay employer National Insurance. This will save companies £500 million a year from 2015.

Another SME-focused move in the Autumn Statement was George Osborne’s decision to allow business owners to give away their firms to their employees via John Lewis-style partnerships without being hit by Capital Gains Tax and Inheritance Tax.

Partners in those businesses will now also get tax relief on bonuses up to £3600 a year - at present, partnerships are liable to pay income tax and National Insurance contributions on profit-related pay, whereas shareholders in limited companies pay a lower corporate tax rate.

Together these partnership measures will cost the Government £15 million in 2015, rising to £25 million the following year.

However many small business owners were disappointed that the Chancellor failed to announce an extension to the investment allowance for spending on plants and machinery. It was increased to £250,000 for expenditure made between 1 January 2013 and 31 December 2014. However George Osborne ignored calls for an extension of that allowance to aid the economy’s recovery.