The UK Budget 2011 and Plan for Growth was set forth in a recently released white paper. Sir Alan Collins KCVO CMG Consul-General shared the document with the BABC of Greater Philadelphia and highlighted the British Government’s trade and investment strategy. The information is directly related to the theme of Sir Alan’s speech presented during the BABC 2010 Annual Holiday Luncheon, during which he provided an updated report on the key to UK trade and investment strategy — rejecting protectionism and ensuring a greater openness to trade and investment. The strategy includes 62 actions the UK will be pursuing to help secure a strong, sustainable and open economy that benefits business both domestically and internationally. The entire UK Budget 2011 and Plan for Growth document is permanently housed on the BABC of Greater Philadelphia website, and can be accessed via http://hosted.gpcc.com/babcphiladelphia.com/wp-content/uploads/2011/04/UKTI-Trade-and-Growth-PDF1.pdf.
UK Trade and Investment for Growth: Executive Summary
The British Government has taken decisive action to reduce the deficit and restore economic stability – the essential foundation for rebalancing the economy. Building on this, the Government determined that it needs to create the right conditions for business to grow: bringing down the barriers which are holding enterprise back. The Plan for Growth has four overarching ambitions:
- To create the most competitive tax system in the G20;
- To make the UK the best place in Europe to start, finance and grow a business;
- To encourage investment and exports as a route to a more balanced economy; and
- To create a more educated work force that is the most flexible in Europe.
Major items already implemented include reducing the corporate tax rate, reforming Controlled Foreign Company rules, fundamentally reforming the way the planning system works and reducing the burden of regulation that businesses have to comply with. Please read below for additional details about these measures.
- A reduction in the main rate of corporation tax by a further one per cent. From April 2011, the rate will be reduced from 28% to 26%, and by 2014 it will be reduced to 23%, the lowest in the G7.
- A reform of the rules on Controlled Foreign Companies, including introducing an internationally competitive 5.75% tax rate on overseas financing income, and an opt-in exemption from corporation tax on the profits of foreign branches. This will allow businesses based in the UK to compete more effectively with those based overseas, and continues the move to a more territorial form of corporate taxation.
- Continued regulatory reform, including dropping existing proposals for specific regulations which would have cost business over £350 million a year, putting in place a moratorium for micro businesses and start-ups from new domestic regulation for 3-years, and a public review of 21,000 regulations with a presumption of removing them if they are seen as burdensome. This is on top of the “one-in, one-out” policy already in place.
- Radical changes to the planning application system with a new presumption in favor of sustainable development, so that the default answer to development is “yes”, and ensuring that planning applications and appeals are processed within 12 months.
- 21 new Enterprise Zones to focus growth in specific parts of the UK, with superfast broadband, lower taxes and low levels of regulation and planning controls.
- Funding for up to 50,000 additional apprenticeship places over the next four years. This will bring the total new apprenticeships under this Government to 250,000. Expanding the University Technical College program from 12 to 24 colleges by 2014.
- An increase in Entrepreneurs Life Time Relief, to be doubled to £10 million from April 2011.
- An increase in the SME Research & Development tax credit rate to 200% from April 2011 and 225% by April 2012.
- New funding for infrastructure, with £200m in new funding for rail projects, £100m for roads.
- To encourage investment in business with the highest growth potential, the budget announced an increase in the rate of the Enterprise Investment Scheme (EIS) income tax relief from 20% to 30% from April 2011, and increasing the qualifying company size, annual investment limit (EIS and Venture Capital Trusts) and providing additional support for seed capital investment in 2012, subject to State Aid approval.
- The introduction of a carbon price floor for electricity generation from 2013 starting at £16/ton, and initial capitalization of £3bn for the Green Investment Bank to support green economy infrastructure development.
Additional information about the UK Budget and Plan for Growth can be found on the HM Treasury website (http://www.hm-treasury.gov.uk/2011budget.htm).
As a valued member of the BABC of Greater Philadelphia we would welcome your thoughts and reactions to this information. Kindly filter any questions or comments about the UK Budget and Plan for Growth through jrosenberg@greaterphilachamber.com.
