2013 Budget: ‘a tax off jobs’

Jo Faragher

The Chancellor George Osborne announced a budget yesterday for “an aspirational nation”; for “people who work hard and want to get on”. He also predicted that this year, the economy would not slip back into recession. 

For recruiters, the most eye-catching element of the budget will have been a new Employment Allowance, which knocks the first £2,000 off the National Insurance bill for every business and charity. This will make a big difference to small recruitment businesses, and it’s thought that 450,000 small businesses will pay no National Insurance at all under the new scheme, which starts in April 2014.

It’s hoped that by incentivising small businesses that employ only a few staff, they will feel more inclined to hire new people and boost economic growth – Osborne called it “a tax off jobs”.

Other features of the 2013 budget relevant to recruiters included:

• Income tax allowance raised to £10,000 from 2014
• From 2015-2016 until 2020, £3bn will be given each year to new infrastructure projects (total of £15bn)
• Flat rate pension plans brought forward by a year
• Capital Gains Tax relief for firms that sell shares to employees
• Introduction of new tax avoidance/evasion measures, including schemes with Jersey and Guernsey, designed to recoup £3bn in unpaid taxes
• Corporation tax to be cut by one percent to 20% in 2015

Commenting on the budget announcement, Mark Beatson, chief economist at the Chartered Institute of Personnel and Development said: “The proposed reduction of up to £2,000 in employer National Insurance Contributions… will provide a marginal incentive for small businesses to create new jobs and the announcement of growth vouchers to enable small firms to access business advice has the potential to provide them with invaluable help in recruiting, managing and engaging employees in support of business growth.” 

Tom Hadley, director of policy at the REC, said: “The Chancellor had to deliver on jobs and growth and with measures that cut the cost of hiring, reward workers with more take-home pay and reduce the corporate tax burden on businesses George Osborne has made some steps in the right direction. These measures are very welcome and emphasise that work pays and Britain is open for business.”

He added: “Investment in infrastructure to kick start construction and drive growth is good news as was the promise to deliver on Lord Heseltine’s ideas for helping SMEs through increased regional funding and an extension of the Funding for Lending scheme. Sadly, there was no sign that the government plans to do anything to help small businesses access public sector contracts.”

The REC also welcomed specific announcements about more robust enforcement of tax avoidance regulations from HMRC and confirmation that amendments to IR35 provisions will be taken forward.