Budget 2005: simpler VAT rules, technology boost
Brown's budget for business
Update Gordon Brown presented his 2005 Budget to the House of Commons this afternoon and promised British business a lighter regulatory environment and simpler VAT regulations. The UK chancellor celebrated what he claimed is Britain's 50th consecutive quarter of growth and predicted another four quarters of growth of between 2.5 and 3 per cent.
He also promised an increase in spending on IT in primary and secondary schools to £1.67bn. Older pupils will get the chance to lease computers for use at home.
Brown said that with India and China now producing four million graduates a year it was more important than ever for the UK to encourage people to stay in education. Seventeen year olds will be entitled to as much as £70 a week if they stay in education or training.
Brown said: "We need to enhance the flexibility needed for a successful economy. So we will reduce the regulatory burden for British business. We will reduce 35 regulatory agencies to just nine. For companies meeting the highest standards there will be a major reduction in inspections they face."
The Exchequer will also encourage increased takeup of simplified VAT filing for smaller companies. But Brown warned of tougher penalties for rule breakers.
The fifty minute speech also promised free local bus travel for every pensioner along with a £200 council tax reduction. Brown also called for a new national network for stem cell research.
The threshold at which Stamp Duty kicks in on home purchases has been raised from £60,000 to £120,000.
Corporate tax, air passenger duty and company car taxation are all frozen.
From midnight there is a 1p increase on a pint of beer, 4p on a bottle of wine and 7p on cigarettes. Duty free allowances are to increase from £140 per person to £1,000. Fuel duty rises are deferred until September.
The British Chambers of Commerce welcomed Brown’s changes to regulation. In a statement BCC said: "The moves announced in today’s Budget are a positive step forward, particularly on regulation. We are pleased to see that our main proposals on addressing the burden of regulation have been adopted by the Government. We are also looking forward to working with HM Customs and Excise to promote general awareness of the VAT system amongst small businesses.
“The British Chambers of Commerce looks forward to seeing the ambitious proposals to cut the cost of red tape become a reality. Employers have increasingly been swamped by additional regulation. Our latest figures have shown an extra £39bn of regulatory costs since 1998." John Higgins, director of Intellect, the IT trade body, said: "Today's Budget is halfway to getting it right for the knowledge economy. However, the Chancellor must do more if we are to become 'the world's leading location for research-based, science-based and knowledge-based industries'.
“UK hi-tech firms will appreciate the commitment to encourage investment in design, as this is an area where UK technology, telecoms and electronics firms have the most opportunity to add value and become more competitive,” Higgins said.
“Firms will also welcome the Chancellor's commitment to deliver greater consistency in the R&D Tax Credit. However we look to Government to ensure that software is included within this, as this is the area that has suffered most due to inconsistent treatment by tax inspectors." But Higgins warned the government: "You'll have to do more than that if you want to make any impact on the UK's competitiveness - to fail at this is not an option." ®