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."