Budget 2013: Employment - Companies get boost in cuts to NI and benefits for employees

Britain's businesses were given a range of measures to offer more staff benefits and cut employee costs, including a £2,000 cut to firms' national insurance contributions, in today's Budget.

The Chancellor said the new Employment Allowance will see NI contributions paid by companies reduced by up to £2,000 a year. He said more than 90 per cent of companies benefiting from the measure would be small and medium-sized businesses, as well as charities and community clubs. Companies with fewer than 10 staff will see their employer NI contributions cut by 80 per cent as a result, the Treasury said.

The legislation will come into force next April. Companies will also benefit from the further trimming of corporation tax on all businesses – large and small – to 20 per cent in 2015. But the country's big banks will see the specific bank levy on their assets raised to 0.142 per cent next year from the 0.13 per cent which the Chancellor announced in his Autumn Statement. He said this was in order to replace income from the banks which they had saved from his lowering of corporation tax.

Employers were also given more flexibility on plugging pension deficits. Where previously firms were forced to invest specific amounts within a tax year, now they will be able to postpone payments if they can prove failing to do so would damage their growth prospects.

Other concessions to Britain's smaller firms included in the Budget were "growth vouchers", with the Government paying out £10m in the 2013-2014 financial year and £25m in the following 12 months to offer companies with ambitions to expand cheaper services such as legal or HR advice.

Staff will also see their tax-free loans for commuting costs double to £10,000. "The increase from the current £5,000 allowance reflects the increased costs of season tickets," said Cormac Marum, a consultant at accountants Harwood Hutton.

A further initiative to boost staff motivation saw the Treasury confirm details of the employee shareholder status, where individuals can be given up to £2,000 shares in their firms, tax-free, and can buy up to £50,000 worth of shares, which escape capital gains tax on sale.

"This is an attractive tax break for employee shareholders," Mr Marum added. "This may make it worthwhile to give up some of their employee rights."

A separate initiative, aimed at boosting the backing of small firms on public markets, saw the Chancellor axe stamp duty on dealing in shares of companies on the junior stock market, AIM, and other markets designed for small growth companies.

Measures to combat the 130 million working days bosses lose to staff taking sick leaves each year were also introduced. The Treasury said companies can spend up to £500 per employee on medical treatments recommended by the Government's Work Assessment Advisory Service, and their spending will not be taxed as a benefit.

Case study: The small business owner

Robin Vaughan-Lyons, 49, runs two community enterprise shops, Turn Around and Dizzy Spells, in Margate. Any profits go to the Queen Elizabeth The Queen Mother Hospital, Monkton Nature Reserve, Demelza Hospice and the Samaritans.

"Hopefully, the tax benefit will have a positive effect, but we have to have shoppers coming and spending. Margate is a poor area. People don't have money to spend. So it wouldn't matter if they reduced our tax to £5 a year – if we're not making £5 a year, it's not going to help,

"The fact that corporation tax will be cut to 20 per cent is good news for small businesses. I'd like to see something which gives people the ability to go out and spend money in independent shops."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Contracts Executive - City of London

£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

Recruitment Genius: Call Centre Debt Collector - Multiple Roles

£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Guru Careers: Financial Director / FD / Senior Finance Manager

Up to 70k DOE: Guru Careers: We are seeking an experienced Financial Director ...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen