Business community praises Chancellor's Budget plans to introduce National Insurance allowance and scrap fuel duty rise
The Government is acting to "take tax off jobs" by reducing the amount of National Insurance businesses have to pay in a bid to boost the economy and reduce unemployment.
One of the key features of Chancellor George Osborne's Budget on Wednesday was his plan to introduce an Employment Allowance of £2,000 a year for businesses and charities on their National Insurance contributions (NICs).
The allowance, which takes effect in April next year, is designed to help small businesses and start-ups looking to take on their first employee or hire more, with 2.5 million employers expected to benefit in total and 450,000 smaller firms taken out of National Insurance altogether.
Businesses with a workforce of 10 or less will pay £805 less in NICs, according to the Treasury, and smaller firms will be able to take on one member of staff with a salary of £22,400 or give four workers the minimum wage without having to pay any contributions.
The move on NICs is just one measure the Chancellor announced to boost the economy as he delivered a gloomy budget for the economy. He was forced to slash his 1.2% growth prediction in half to 0.6% and lowered next year's forecasts from 2% to 1.8%.
He was, however, able to tell the Commons that the Government's austerity measures he put into place in 2010 had helped the UK cut its deficit by a third. He also said they had helped businesses employ 1.25 million workers, but his Budget coincided with an announcement of the latest unemployment figure that showed a rise of 7,000 to 2.52 million.
There was good news for drivers and hauliers with the scrapping of the 3p fuel duty rise planned for September and Mr Osborne also said he would be reducing corporation tax to 20% in 2015 to attract more overseas business.
He said he was in discussions with the Bank of England over a possible extension of the Funding for Lending scheme and said his Budget would help "those who aspire to own their own home, get a job or start their own business".
The Budget was met with the approval of the business community. The chairman of the Federation of Small Businesses, John Walker, said the NICs cut was more than it was calling for and he was also happy to hear that fuel duty would not be rising in September.
John Langworth, the director general of the British Chambers of Commerce, said although businesses welcomed many of his plans, Mr Osborne should have done more to promote growth and enterprise by putting an end to business rate increases.
Copyright Press Association 2013