News story

Budget 2013 – what it means for Wales

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Chancellor of the Exchequer delivered his Budget to Parliament on 20 March 2013. Here is a breakdown of how the announcements will impact in Wales.

BARNETT CONSEQUENTIALS

As a result of spending decisions at the Budget the Welsh Government will benefit from an additional £161m of capital spending power.

This will bring the total amount of additional capital spending power granted to the Welsh Government over the spending review period to more than £858 million

FUEL DUTY

The fuel duty increase that was planned for 1 September 2013 will be cancelled

IMPACT IN WALES

Cancelling the fuel duty rise will help owners of the 1.8million motor vehicles in Wales, saving at typical motorist £25, van driver £50 and a haulier £750.

CORPORATION TAX

Welsh businesses will benefit from a further 1% reduction in the main rate of corporation tax, bringing it to 20% by 2015.

HELP TO BUY

Help to Buy Mortgage Guarantee: Introduction of Government equity guarantee on 95% mortgages to help across the UK.

IMPACT IN WALES

This policy is available across the UK. It will help those struggling with deposits, but that could afford to maintain a mortgage.

For an average home mover in Wales, a 90 per cent mortgage would require a deposit of around £18,000. With a 95 per cent mortgage they would require a £9,000 deposit.

PERSONAL ALLOWANCE

The income tax personal allowance will increase to £10,000 from 1 April 2014

IMPACT IN WALES

This increase to the personal allowance will benefit £1.1m tax payers in Wales and lift 12,000 low income individuals out of income tax altogether in Wales. Taken together, changes to the personal allowance since 2012 will have lifted 130,000 people out of income tax in Wales.

NATIONAL INSURANCE

The Government will introduce an allowance of £2,000 per year for all businesses and charities to be offset against their employer NICs bill from April 2014.

IMPACT IN WALES

In 2014-15, this will benefit 35,000 businesses in Wales by £50million, with 20,000 of these businesses being taken out of employer NICs altogether.

CHILDCARE RELIEF

The Government will provide £750m a year to help support working families with 20 per cent of their childcare costs, for children under 12, up to a limit of £6,000 (in total cost) for each child per year.

IMPACT IN WALES

This measure will support 110,000 families in Wales with 170,000 children under 12.

In Wales the cost of childminder for 25 hours has increased (3%) to around £95 (depending on the age of a child), and the cost of 15 hours a week at an after school club has increased by 20% to just under £50.

INCOME TAX: CASH BASIS FOR SMALL BUSINESSES

From April 2013, the Government is introducing a new cash basis to calculate income tax for small, unincorporated businesses. Businesses with annual receipts up to £79,000 will be eligible.

IMPACT IN WALES

At least 110,000 self-employed businesses and partnerships in Wales would be eligible for the new cash basis for small businesses.

VEHICLE EXCISE DUTY FREEZE

Vehicle Excise Duty (VED) for HGVs will be frozen in 2013-14.

All operators of HGVs and Buses (whose VED is connected to the HGV rate) across the UK will benefit from this policy.

IMPACT IN WALES

Operators of over 21,000 HGVs and over 10,000 buses and coaches in Wales will save between £5 and £60 in VED per vehicle, compared to an increase in line with RPI, depending on the VED band their vehicle falls into. Hauliers have been benefiting from frozen VED rates since 2001 and in 2013-14 HGV rates would be around 45% higher if they had increased in line with RPI since 2001.

SMALL AND MEDIUM ENTERPRISES

Wales’ 192,745 Small and Medium Enterprises and Mid-sized Businesses will benefit from The Business Bank. This new institution will:

  • publish a business strategy setting out an accelerated timetable for how the Bank will deploy £1bn of new capital, improve existing schemes and develop a lasting new institution to support SME growth by the end of 2014;

  • request proposals for a £300m co-investment fund;

  • create two new venture capital funds for £75m; and

  • support more lenders to increase SME lending through the Enterprise Finance Guarantee (EFG).

Additionally, 10,100 that will benefit from faster card payments worth c.£500m pa nationally, providing interest savings of c.£45m pa.

AEROSPACE TECHNOLOGY INSTITUTE

The aerospace cluster based around the North Wales border will benefit from access to the £2.1 billion Aerospace Technology Institute (ATI) which will support research and development in this key UK sector.

M4 IN SOUTH WALES AND SILK COMMISSON

The Government is continuing to discuss options for funding improvements to the M4 in South Wales with the Welsh Government, alongside an assessment of the Silk Commission’s recommendations, and will be reporting on progress in due course.

CLASSICAL VEHICLE VED EXEMPTION EXTENSION

Extension of the classic vehicle tax exemption, removing tax from over 30,000 1973 built vehicles.

IMPACT IN WALES

This will benefit up to 1,647 owners of 1973 vehicles in Wales saving them up to £225 a year.

ABOVE THE LINE CREDIT

The Government is introducing a new ‘above the line’ credit for large company R&D expenditure at a rate of 10%, increased from the 9.1% rate proposed at Budget 2012.

IMPACT IN WALES

There are around 60 claims for large company R&D relief in Wales each year – these companies will be able to benefit from a higher rate of relief for their R&D expenditure.

This will support the 8 AIM listed businesses located in Wales. Firms will benefit from reduced financing costs, encouraging the investment needed to further boost their growth and increase employment.

STAMP DUTY ON SHARES

Abolition of stamp duty on shares for companies quoted on small company growth markets, including AIM and the ISDX Growth Market.