Budget for life science
The Chancellor of the Exchequer, the Rt Hon George Osborne MP, delivered his fourth Budget yesterday. Here is some detail relevant to health and social care sector within the full Budget document
The Chancellor reaffirmed the Government’s commitment to health spending, confirming that NHS spending would continue to be ring-fenced while other Departments are being asked to make 1% cuts to their budgets. The UK is predicted to spend £137 billion on healthcare in 2013-14 with an under spend from the previous year of £2.2 billion.
Social care funding
Spending on personal social care is predicted to reach £31 billion in 2013-14. The Government has confirmed that it will introduce a cap on individual contributions to social care of £72,000 a year earlier than expected, in 2016. The Government estimates that its reforms should help an extra 100,000 people who would not receive any support under the current system.
Research and development
The Government has provided an update on its commitment to making the UK the best location for corporate headquarters in Europe, highlighting that the SME R&D tax credit has been increased more than twofold. It reaffirmed its commitment to introducing ‘above the line’ credit of 10% for large company research and development investment from April 2013, with an aim of making R&D more visible to those making investment decisions. The Government will expand the Small Business Research Initiative, which aims to support small businesses in conducting research and development. Funding for the initiative will be increased from £40 million in 2012-13 to £200 million in 2014-15.
Tax and NHS Bodies
The Government has confirmed that it will include measures in the Finance Bill 2013 to exempt NHS bodies from corporation tax and include them in the VAT refund scheme:
Life sciences industry
The Government has announced that £1.6 billion of funding will be made available to develop and support strategies that identify long-term opportunities for growth, and address any barriers to growth across a number of industry areas. This includes life sciences, which was identified in the 2012 Budget as one of 11 key industries. Industry sector councils will also be strengthened to make them better able to engage with business so that policy reflects the needs of industry.
Corporation tax will be reduced to 20% by April 2015 in order to make the UK more competitive – the joint lowest rate of corporation tax in the G8. Corporation tax will also be unified into a single rate across businesses for the first time since 1973.
The Government has announced additional support for enterprise. This includes measures that would make the first £2,000 of National Insurance contributions for every employee of business or charity free as part of a new ‘Employment Allowance’. It is expected that up to 1.25 million employers will benefit and 450,000 employers will not have to pay National insurance contributions at all. The aim is to reduce the burden on businesses when they are employing new staff. In addition, tax relief on investments made into small, early stage companies will be extended, including an extension of the capital gains tax holiday. Any investors making capital gains in 2013-14 will receive a 50 per cent capital gains tax relief when they reinvest those gains into start-up companies in either 2013-14 or 2014-15. Furthermore, there will be additional tax relief to encourage investment in social enterprises. The Government will consult on the details of this tax relief later this year and the measures would be published with the Finance Bill in 2014.
Finally, the Government has announced that it is abolishing stamp duty on shares for companies listed on growth markets including the Alternative Investment Market (AIM) and the ISDX Growth Market, from April 2014. The aim of this is to encourage investment by lowering the cost of buying shares, thereby promoting growth.
From April 2013 companies will be given a reduced 10% rate of corporation tax on profits from patents, driving growth and investment in UK innovation.
The Government is introducing a “Business Bank” to deploy £1 billion of capital for new businesses and to improve existing schemes. This includes £75 million of new venture capital funding through an extension to support start ups and early stage companies.
For more information about how ADF Insurance can help arrange insurance for companies in the life science sector please do not hesitate contact me.