Small business support group the Forum of Private Business has welcomed a number of key victories for SMEs in today’s Budget.
The Forum believes the 1% cut in small companies’ tax, together with the new £5 million threshold for entrepreneurs’ relief on capital gains tax (CGT), are positive measures which contributed to a small business-friendly Budget overall.
The Forum also believes measures to extend the Enterprise Finance Guarantee scheme, abolish back-dated business rates and continue tax breaks for holiday lettings further demonstrate the new Government’s appreciation of small business-related issues.
Further pledges to review all employment law, outlined in the full Budget document, have also been warmly welcomed by the Forum. The proposals, forcing each Government department to review the employment regulations laws for which they are responsible, come following the Forum’s calls for a review of all workplace legislation.
Forum chief executive Phil Orford said: “I think many small business owners will be pleasantly surprised by today’s Budget.
“Not only did the Chancellor make all the right noises about supporting enterprise and smaller businesses, he backed it up with concrete, tangible policies.
“Obviously, the VAT rise will have an impact on many smaller businesses, either directly or indirectly. However, the money to pay off the deficit has to come from somewhere and I expect most Forum members would rather stomach a VAT increase than a rise in other taxes, or even greater cuts in public spending.
“The 1% reduction in small companies’ tax is obviously more than welcome – it’s something we and the SME community have long called for. It also represents a 2% cut in real terms as the previous government had planned to increase small companies’ tax by a further percentage point.
“The rise in CGT had proved controversial with business owners ever since the idea was first put forward, but the 28% rate is a gentler increase than many people were expecting. More importantly, the rise in the entrepreneurs’ relief threshold to £5 million is more than we could have hoped for and it should ensure that most small business owners aren’t penalised too heavily when they come to sell their companies.”
Mr Orford continued: “The pledge for a wholesale review of employment law – quietly announced in the full Budget document – is also a highly welcome one.
“Our members frequently cite employment law as one of their main areas of concern so any moves to simplify and rebalance the regulations affecting smaller employers have got to be welcomed.”
Mr Orford added: “The moves to limit rises in National Insurance, introduce NI exemptions for some new employers and raise the income tax threshold were also positive, even though they were watered-down from the Conservatives’ original pre-election promises.
“What we will be calling for now is a guarantee of genuine private sector input into the white paper on local economic growth Mr Osborne mentioned. We want to see it focusing on smaller business-led innovation and jobs in regions that are likely to be affected by public sector job cuts.
“We will also be lobbying the government to make sure the ‘fuel price stabilizer’ Mr Osborne referred to becomes a reality. Extortionate petrol and diesel prices represent a huge inflationary problem for smaller firms and could threaten recovery if left unchecked.”