The Budget last week was rather underwhelming for most small firms, although there was a smattering of good news for VARs and computer retailers.
In a bid to make the UK a centre for technology in Europe, and with the EU the UK's biggest market abroad, Chancellor George Osborne announced several measures to inspire confidence in technology-related businesses.
However, we believe the Budget did not offer the kick-start required to help UK firms drive the economy forward.
There were incentives for certain creative industries, such as games developers, and to support the rollout of faster broadband services. Also, 'above-the-line' R&D tax credits were announced that loss-making companies would be able to claim.
Next year's Finance Bill was announced. If it passes into law, it may allow a corporation tax rate of just 10 per cent for a proportion of profits that could be attributed to patent and other qualifying intellectual property from 1 April 2013.
More generally, the government is continuing to ease the burden of corporation tax for businesses. It has announced that it plans to bring the main rate down to 22 per cent by 2014.
Overall, the Treasury estimates that these combined corporation tax changes will save businesses about £6bn a year by 2015-16.
Osborne has also said he will reduce the top rate of income tax for those earning above £150,000 per annum from 50p to 45p by 2013. He also said that cutting corporate tax will boost entrepreneurship.
Some people have criticised this plan because it is cutting taxes for the wealthy. However, we are backing this move because it encourages much-needed inward investment and, according to HMRC, the 50p tax rate only raised a third of the £3bn it was expected to.
Osborne has also promised to continue to clamp down on tax evasion, as well as consult on a possible merger between income tax and National Insurance, which could potentially reduce red tape.
He has expressed a desire to make the UK's complex tax system among the most competitive in the world. This would be a key development, and one that is long overdue.
A government report, Making tax easier, quicker and simpler for small businesses, outlines various pledges aimed at making the UK the best place in Europe to start and grow a business.
It is believed this report is a response to a review of small business tax by the Office of Tax Simplification, part of the government's Plan for Growth.
Key points include changes to the tax rules and improving HMRC services.
Yet small businesses and the economy really need policies that drive rapid growth now – and some of the key Budget measures won't take effect for at least a year. The tax overhaul may take even longer.
Furthermore, there was nothing further on easing fuel duty and business rate increases to stem rising business costs, and nothing on extending the existing National Insurance holiday to boost job creation.
Small business finance featured prominently; a new National Loan Guarantee 'credit easing' scheme was announced. Anything designed to reduce the steep cost of bank lending is welcome, but it has to work effectively. And the smallest firms – those most in need of affordable funding – could miss out.
Equally, our suggestion of tax breaks for private lenders – such as those given to equity investors to stimulate competition in finance markets – was not taken up.
To sum up, FPB believes only small steps were made to help business, where a giant leap was needed.
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