Seed Enterprise Investment Scheme (SEIS)
The Government will launch a new Seed Enterprise Investment Scheme (SEIS) from April 2012, offering 50 per cent income tax relief for individuals who invest into shares of qualifying companies, with an annual investment limit of £100,000 and a cumulative investment limit of £150,000 per company. The scheme will also offer a capital gains tax exemption on gains realised in 2012-13 and then invested through a SEIS in the same tax year.
Small business rate relief holiday
Small businesses will benefit from an extension of the small business rate relief holiday - for a further six months from 1 October 2012 to April 2013. Additionally, the Government will provide businesses with the opportunity to defer 60 per cent of the increase in their 2012-13 business rates bills based on the Retail Prices Index (RPI) uprating, which will be repaid equally over the following two years.
Enterprise Zones in six assisted areas will qualify for enhanced capital allowances. In these areas, 100 per cent allowances will be available for plant and machinery investment incurred between April 2012 and March 2017. The Enterprise Zones include the Black Country, Humber, Liverpool, North Eastern, Sheffield and Tees Valley.
The Bank Levy will be increased from the current rate of 0.078 per cent to 0.088 per cent from 1 January 2012.
Measures were announced in order to reduce the impact of policy on the costs of electricity for the most energy-intensive industries. The plans include compensating key electricity-intensive businesses to help offset the indirect cost of the carbon floor and the EU Emissions Trading System, subject to state aid guidelines; whilst also increasing the level of relief from the climate change levy to 90 per cent for Climate Change Agreement participants from 1 April 2013.
As part of the commitment to reducing the burden of complying with employment law, the Government is increasing the qualifying period for unfair dismissal claims from one year to two years from April 2012, in an attempt to address the fear and risks to employers of taking on new employees. The Government will also consult on introducing fees for individuals who want to bring cases to employment tribunals and the effectiveness of the Transfer of Undertakings (Protection of Employment) (TUPE) regulations.
Research and development
In order to encourage research and development activity by larger companies, the Government will introduce an ‘above the line' tax credit. The Government will consult on the details at the 2012 Budget and confirmed that SME R&D incentives will not be reduced as a result. These proposals build on the measures introduced in the 2011 Budget to help SMEs.
VAT: Low value consignment relief
VAT relief will be removed for low value goods (under £15) sent to the UK from the Channel Islands with effect from 1 April 2012, as previously announced on 9 November 2011, in an attempt to help the competitiveness of UK based suppliers.
VAT: cost sharing exemption
Following consultation after the Budget 2011, the Government will introduce a VAT exemption for services shared between VAT exempt bodies, including charities, universities, higher education colleges and housing associations wishing to make efficiency savings by working together to achieve economies of scale. The exemption will become law when the Finance Act 2012 receives Royal Assent.
As a consequence of the problems arising from the adverse credit conditions in the euro area the Government recognises that this is having a knock-on effect for small and mid-size businesses which are often most dependent on the banking system for finance. In order to provide support the Government is launching a range of support schemes which are reckoned to be worth up to £21 billion. These measures are intended to improve the flow of credit to businesses that do not have ready access to capital markets. These measures include the National Loan Guarantee Scheme and the Business Finance Partnership.
National Loan Guarantee Scheme
This provides funds of up to £20 billion of guarantees for bank funding over two years. This is intended to permit banks to offer lower cost lending to smaller businesses. This lending is subject to state aid approval.
Business Finance Partnership
The remaining £1 billion of the credit easing funds is to be available to invest in SMEs and mid-sized companies in the UK through non-bank lenders. Initially, these funds will be targeted toward co-investment with the private sector with loan funds that lend directly to mid-sized businesses.