Sunday Trading laws are to be relaxed over the Olympics and there will be a reduction in corporation tax – some of the measures announced by George Osborne, Chancellor of the Exchequer, in today’s Budget.
However, he also revealed that new VAT rules will apply to hot food and cold food, as the government strives to address VAT anomalies.
“VAT will also apply, to the extent that it does not already do so, to the sale of hot food, cold food consumed on the supplier’s premises,” read the Budget document. These will be effective from 1 October 2012.
An additional 1% reduction in corporation tax will be introduced, with the rate to drop from 26% to 24% in April 2012, then to 23% in April 2013 and 22% in April 2014.
The Budget also stated that low interest rates would be passed to small businesses through its National Loan Guarantee Scheme.
Osborne said the Budget maintained the government’s strategy to “reduce the deficit, announce far-reaching tax reforms, and support growth and reward work”. The focus was on three areas: creating a stable economy, a fairer, more efficient and simpler tax system, and further reforms to support growth.
In its bid to simplify tax systems, the government is to launch a detailed consultation on the possible integration of income tax and National Insurance Contributions. This will be published after the Budget.
The Office for Budget Responsibility (OBR) said the outlook for the British economy was broadly unchanged, with 0.8% growth forecast for this year and, subsequently, 2% for 2013, 2.7% for 2014 and 3% for 2015 and 2016.
The Forum of Private Business (FPB) welcomed several of the measures set out on tax and finance, but insisted that the smallest firms must benefit from the new National Loan Guarantee and Business Finance Partnership schemes.
Phil Orford, chief executive, said: “The overall verdict is that there have been some tentative steps in the right direction – and perhaps the beginnings of a road map for the future – but for the next year or two, when many of these policies kick in, what small businesses and the economy need are confident strides forward now.
“We saw nothing on reducing the mounting burden of business rates or fuel duty via cuts and a real stabiliser to regulate prices at the pump.
“Reducing the top income tax rate to stimulate entrepreneurship and continuing to cut corporation tax are much-needed measures, and we also welcome the concept of merging income tax and National Insurance as a first step in what looks to be long overdue reforms to the tax system for small firms, but the Chancellor could have gone further to give businesses and the economy a bigger boost.”