The personal allowance each UK employee is entitled to earn before income tax is levied was increased for the third consecutive budget, to £10,000, from 2014. The increase had been planned to become effective in 2015 but was brought forward one year. Before the 2012 budget, the rate of corporation tax in the UK was 26%. In his 2013 budget, Osborne announced another reduction in the rate in 2015 to 20%. The reductions would be offset by the bank levy. New employment allowances will cut National Insurance bills for all UK firms, and 450,000 small businesses should pay no employer NI. Tax reliefs were also announced for investment in social enterprises, and Osborne axed a stamp duty on shares traded on growth markets such as the Alternative Investment Market. Osborne cancelled an increase in fuel duty that had been planned for September 2013, and also cancelled a 3p increase in duty on beer planned for April 2013, instead cutting the beer duty by 1p from 24 March 2013. The duty escalator on beer was also cancelled, but remains in place for wine, spirits and cider. Duties on cigarettes were unchanged. Tax incentives were announced for ultra low-emission vehicles and for investment in shale gas. The Staffordshire Potteries industry will be exempt from the Climate Change Levy.
Taxes
Benefits and expenditure
An additional £15 billion of investment was announced for infrastructure such as roads, railways, power stations, and major construction projects by 2020. Cuts of around 1% were announced to many government departments' budgets, except the Department for Health and Department for Education. The income from fines arising out of the Libor scandal shall be given to soldiers' charities. Military wages would also be exempt from limits on progression pay rises imposed on the public sector.
Spending
Economy
Osborne stated that the Office for Budget Responsibility predicted that the UK would not enter recession again in 2013. The OBR cut its forecast for economic growth in 2013 to 0.6% from 1.2%. It forecast growth to be 1.8% in 2014, 2.3% in 2015, 2.7% in 2016, and 2.8% in 2017. The OBR predicted government borrowing of £121 billion in 2013 and £120 billion for 2014. Government debt as a share of gross domestic product was forecast to increase from 75.9% in 2013 to 85.6% in 2016. The majority of the other business tax changes announced impact small businesses, now receiving the benefits of the National Insurance Contribution. SMEs will also benefit from a certain number of reliefs such as capital gains relief on Seed Enterprise Investment Schemes and stamp duty relief from trading AIM-listed shares, which will help them raise capital. As for larger companies, the advantages of the new budget and incentives will be focused on Research and Development.
