Budget (1): Cash-based accounting and NIC/PAYE integration

Chancellor George Osborne promised a Budget to reward work, back business and be on the side of aspiration in his opening remarks as he addressed the Commons for his third Budget.

He reminded the Commons of the four principles of taxation established by Adam Smith 200 years ago:

• simple;
  
• predictable;
  
• support work;
  
• fair.

He said this Government had inherited a system which had drifted from these.

As regular Budget watchers will know, often the detail affecting freelancers and small businesses is contained in the supplementary information which is released after the conclusion of the Budget speech.

We are checking the details of the supplementary paper work and will report back with any measures hidden in the small print which might affect freelancers.

In the meantime, some of the issues which the Chancellor did announce for small businesses during his speech are:

Cash-based accounting

He proposed that small firms will be taxed on the amount of cash passing through their businesses rather than the more complicated methods used for large companies. He said he agreed with the Office of Tax Simplification's proposal that small firms are taxed on the basis of the cash that passes through their businesses, rather than asking them to spend a huge amount of time doing calculations designed for big business.

He promised to consult on this new cash basis for calculating tax for firms with a turnover of up to £77,000 - double what was proposed. This should make filling in tax returns simpler for up to three million firms.

Integrate tax/NIC

The Chancellor also said they are pressing forward with their ambition to integrate the operation of income tax and national insurance – so that businesses do not have to run two different payroll tax administrations.

A detailed consultation on this is being published next month.

Corporation tax

Headline corporation tax is to be cut further from 24 per cent to 22 per cent by 2014.

Interest rates

He promised to pass on low interest rates to small businesses through the National Loan Guarantee Scheme.

Barclays, Lloyds, the RBS, Santander and the new business bank Aldermore are all involved, with £20 billion of guarantees in total to be available.

Full coverage of impact of the Budget on freelancers and small businesses, reaction from the experts and analysis will be available in the Political News section of UKTECH.