PRINT PAGE

Chancellor makes a play for SME votes

24 March 2010 Breaking News

A package of measures to support SMEs in the UK has been unveiled by the Chancellor in the government's budget, but there will be no repeal of the plan to increase national insurance contributions (NICs).

Business rates will be cut for one year from October, equating to a tax reduction for over half a million small businesses in England, 345,000 of which will pay no business rates at all. In an attempt to improve SMEs' access to cash, Alistair Darling has announced a new £500m Growth Capital Fund. A new service enabling firms to complain about difficulties accessing credit will be established, while the time to pay scheme, enabling businesses to spread tax payments over a period of time, will be extended over the whole of the next parliament.

The Federation of Small Businesses welcomed the measures but criticised the Chancellor's decision to go ahead with the hike in NICs, which it claims will come at a cost of 57,000 jobs to the economy.

John Walker, national chairman of the Federation of Small Businesses, said: "Small firms are key to furthering economic recovery as the UK's largest employer and we are concerned that through continuing plans to increase employer NICs and not introducing a NICs holiday to firms employing less than 50 staff who take on more employees, it will increase pressure on struggling firms meaning they will not be able to take on additional staff.

"Proposals to increase the Small Business Rate Relief threshold will be welcome news for those small firms in England whose cash-flow in hindered by big tax bills. A third of FSB members have said that business rates are the biggest taxation obstacle to growth and today's announcement will go far to help firms, especially local shops and businesses."

The leader of the opposition, David Cameron, accused the government of levying "tax bombshells timed to go off the day after the election" and pledged that a Conservative government would not raise national insurance contributions but bring in lower corporate tax rates and small business tax.

Insurers' company reports this year have attributed declining new business figures to pressure on corporate payrolls.

If you would like to share your thoughts on this story or any other issue email news@hi-mag.com