Breaking News: Budget 2011 fuels economy for growth

CHANCELLOR George Osborne today outlined plans to “fuel the tank of the British economy” as he announced a raft of measures to help families and boost business.

Mr Osborne announced plans to introduce enterprise zones, in Birmingham & Solihull plus the Black Country, cut corporation tax and slash £350m of red tape in a Budget which he said would help make Britain the “best place in Europe to start, grow and finance a business”.

In what Mr Osborne described as an “historic step”, consultations are to begin on merging national insurance and income tax.

TheBusinessDesk.com’s Budget coverage is sponsored by accountancy firm Ernst & Young across our three websites.

Corporation tax is to be reduced by 2% from April 1 and by 1% in each of the following three years and the bank levy rate will also be adjusted to offset the fall in corporation tax to ensure the sector does not benefit from this change.

Mr Osborne announced an increase in the income tax threshold to £8,105 from April 2012. Fuel duty will be cut by 1p per litre from 6pm tonight and mileage rates increased to 45p per mile.

A total of 21 enterprise zones, targeted at areas where the economy has struggled and offering tax breaks and discounts on rates, are to be introduced.

Emphasising the need for private sector growth and industries such as manufacturing helping to achieve that, Mr Osborne said the Budget “was one for making things, not making things up” and he said the coalition government wanted to encourage enterprise, export and investment.

Mr Osborne said the forecast for economic growth in 2011 had been downgraded to 1.7%, after figures showed a 0.6% contraction in the last three months of 2010.

Other highlights included an £200m extra to be invested in regional railways – including schemes in Manchester, which Mr Osborne said would speed up journeys between Leeds and Manchester; 40,000 new apprenticeships for young unemployed people; and an extra £2bn being provided for the Government’s Green Investment Banks, which will be introduced a year earlier than planned in 2012.

Mr Osborne described the existing 50% top tax rate as a “temporary measure” but said it was not the “right time to remove it”.

He described small businesses as the “innocent victims of the credit crunch” and announced plans to introduce export credits to help SMEs, and £100m for new science facilities.

He doubled the size of entrepreneurs relief to £10m and increased the income tax relief for businesses to 30%.

Mr Osborne pledged £250m to help 10,000 first-time homebuyers purchase newly built flats and houses in England and increased the charge on ‘non-doms’ to £50,000 for those who have been in this country for more than 12 years.

Graeme Crawford, tax partner at Ernst & Young in Birmingham, said: “I think for business there’s a lot in this. Mr Osborne’s aspirations were backed up in the delivery.

“It’s a very content rich Budget that will give us a lot to look at in the coming days.

“The cut in Corporation Tax and the changes to controlled foreign companies taxation will have a big combined effect. Altogether these new measures seem to be moving the UK in the right direction.

“He also recognises growth is fuelled outside the City of London and the wider Midlands looks set to benefit from a number of the new Enterprise Zones.”