After what went down in history as the ’omnishambles Budget’ of 2012, the contents of which had been leaked in advance all over the media only to be embarrassingly reversed in the following few weeks, this year’s effort was at least kept pretty closely guarded right up to March 20. According to some of the more cynical commentators, the reason why there was little advance disclosure this time around was really quite straightforward even the Chancellor himself had no idea what he was going to be able to put into Budget 2013, since his economic options were so limited. With that background, perhaps it was not surprising that the March 2013 Budget speech was one of the shortest in memory, and provided relatively little real news for the next day’s papers. However, in case you missed it, or have forgotten it already, here are a few of the main points that might affect you and your business.
The announcement that September’s scheduled rise in Fuel Duty (1.89ppl) was being scrapped, was at least one piece of good news. This was not merely for the fact that it might help avoid pushing pump prices up by another 3p or so, but also because it removes the ’will they, won’t they?’ nonsense that we’ve had to endure every six months for the past couple of years. While there’s been no official news beyond this, some ’sources close to the Treasury’ have been hinting that there will not be any further hikes in fuel duty for the remainder of this Parliament ie before the next general election, due in May 2015. We can all only hope that this proves to be true.
This was increased by 2% above RPI on the day of the Budget, and in itself would have raised the price of a pack of 20 ciggies by somewhere around 26-28p. How interesting then that several retailers had already been advised by their tobacco wholesalers (before Budget Day) that the recommended retail prices would be around 40p a packet higher after the Budget!
Many petrol forecourts sell alcohol these days, and there was some good news for them the intended 3p-a-pint rise in beer duty was scrapped, and rates were actually cut from March 25:
Low-strength beer (< 2.8% ABV) by 6%
Medium-strength beer (2.8%-7.5% ABV) by 2%
High-strength beer (>7.5% ABV) by 0.75%
The overall effect of these changes was intended to reduce duty on beer by an average of 1p a pint. Unfortunately for retailers and drinkers, that was about the only good news on the alcohol front. Duty rates on all other alcoholic drinks went up by 2% above RPI, so wine prices rose by around 12p and spirits by around 40p a standard bottle. However, we may not have heard the last word on these changes there has already been some suggestion that the preferential treatment of beer may be illegal under existing competition law and that various trade bodies representing wine and spirit producers may yet mount a challenge to it through the courts.
Corporation Tax (CT) Rates
The headlines immediately after the Budget were dominated by news of a ’cut in Corporation Tax’. Given that many forecourts not only those owned by independent ’dealers’ but a large number run by smaller ’commission operators’ are run as limited companies these days, that sounded like good news. Not so fast: the vast majority of companies running petrol forecourts make annual taxable profits below the first Corporation Tax threshold of £300,000 and their CT rate (technically the ’small profits’ rate, often erroneously-called the ’small companies rate’) is already at 20% and remains unchanged. The headline ’cut’ is really only relevant to companies making taxable profits in excess of £1.5m a year. They will see their CT rate drop to 23% from April 1 this year, then to 21% from April 1, 2014 and eventually to 20% from April 1, by 2015. As presently announced, there’s no plan to cut the ’small profits’ CT rates between now and 2015; instead, they’ve basically said that the ’small profits’ and ’main’ rates will merge at 20% at that time.
Another of the measures that generated big headlines and one that should, in theory, be relevant to all businesses, particularly small ones. As generally described so far, the idea is that each employer will be allowed exemption from paying the first £2,000 of their employer’s NI contributions for the employment year commencing April 6, 2014. It’s a great idea but at the moment that’s about as far as it goes. There are virtually no specific details available from HMRC, all that they will say at present is:
"The government will introduce an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 secondary NICs liability from April 2014. The allowance will be claimed as part of the normal payroll process through RTI. The government will engage with stakeholders on the implementation of the measure after the Budget and is seeking to introduce legislation later in the year."
In other words, we’ll have to wait for a year and hope that they manage to work it out and introduce the required legislation within the next 12 months.
The taxable turnover threshold, at which point a trader is required to register for VAT, was increased from £77,000 to £79,000 per year on April 1, 2013. If your turnover falls below £77,000 from that date you may apply to de-register.
There’s no guarantee that all of the measures announced on Budget Day will actually translate into actions during the coming months; we’ll just have to wait and see how many are implemented by their due dates many of which are actually scheduled for April 2014 any way.