Business Groups Welcome Chancellor’s Tax Relief for SMEs
Business groups have welcomed tax relief schemes announced in the Budget to help small firms, saying that the Chancellor has finally recognised the need to put small business at the heart of economic policy.
However, they expressed continuing concerns about the UK’s Budget deficit and its impact on business activity.
“After two years of economic downturn, the Chancellor has clearly recognised the need to place business at the heart of the Budget,”
said British Chambers of Commerce (BCC) director general, David Frost.
“Doubling the annual investment allowance, help with business rates, and allowing entrepreneurs to keep more of their gains will prove especially popular.”
“However, the Chancellor could have done more to set out a clear plan for the reduction of the budget deficit, which continues to threaten business confidence and investment.”
Alistair Darling’s Budget announcements included a temporary increase in small business rate relief, an agreement with state-funded banks to boost small business lending, the introduction of an adjudicator to deal with small firms’ complaints about bank lending, and increases to investment allowance and capital gains tax relief for entrepreneurs.
The Chancellor’s speech also confirmed an increase in employer’s National Insurance Contributions (NICs) in 2011. The Federation of Small Businesses (FSB) said this would obstruct job creation.
“Proposals to increase the rate relief threshold will be welcome news for those small firms whose cashflow in hindered by big tax bills,”
said FSB chairman, John Walker.
“But continuing plans to increase employee NICs will increase pressure on struggling firms, meaning they will not be able to take on additional staff. It’s a tax on jobs which does nothing to aid economic growth.”
However, the FSB applauded the Government’s commitment to stimulate bank lending.
“The Government must now put pressure on the banks to lend affordable finance to small businesses so they can get on with the job in hand,”
“The role of the new credit adjudicator will be key in this regard.”
Small business owners had mixed views, too. E-commerce software provider Actinic’s director, Chris Barling, said that although the Budget had focused on small businesses, it had neglected to address their most pressing concerns.
“The Government has failed to recognise the day-to-day difficulties of many small firms.”
“As an employer of 40 staff, I would much prefer a reduction in NICs in the first place, rather than to have a government agency decide how much of my own money to give back to me in some form of grant through the new UK Finance for Growth Organisation. We employ people overseas because it is too costly to employ them here and we can’t afford the potential payouts.”
“The Government has put small firms at the centre of the Budget, but often it would be more helpful to small firms if they didn’t intervene and simplified things instead,”
Shamin Hoque, managing director of Curries Online added:
“Relief on capital gains tax will help us, as will the extension to business rate relief. I think most small firms start up with good ideas but it can be expensive to run a business, so if there is opportunity there to get some tax relief that eases the burden.”
“However, the NICs rise outweighs the benefits that he has given entrepreneurs with the tax breaks. When firms grow, they often need to employ people and the Government should be encouraging that. The Association of Certified Chartered Accountants’ SME policy adviser, Manos Schizas, said that many of the Budget’s promises were made for show, due to its timing in the lead up to the election.”
“But there were some good aspects for people wanting to start and grow businesses.”
“However, overall this was a Budget for entrepreneurs, not for small firms.”