Mixed business response to pre-budget report

Small businesses and accountancy groups gave a cool response to Alistair Darling’s pre-Budget report.

The facts:

The Federation of Small Businesses (FSB) welcomed measures to ease the pressure on small firms, including new business loan facilities, tax payment relief and plans to allow firms to offset loses of up to £50,000 over the last three years.

Chas Roy-Chowdury, tax chief at the Association of Chartered, Certified Accountants (ACCA), said the pre-Budget report offered businesses “some help”, but added that the measures were temporary fixes to be paid back laterin tax hikes.

Adrian Mole at Mazars agreed that small firms would benefit, but said the chancellor should not have capped losses eligible for back-dating at £50,000.

The Forum of Private Business (FPB) was more scathing; claiming that the chancellor should have reduced the small business rate of corporation tax rather than just offsetting the planned increase to 22 per cent.

It attacked plans to delay the increase by only a year and said the 0.5 per cent hike in national insurance contributions (NIC) from 2011 would hit small businesses hard.

Accountancy group Bibby Financial Services said the £7bn package of loans and tax cuts for small businesses announced yesterday was “good news”, but tax group Deloitte said this would be cancelled out by fiscal increases later.

The NIC increase will cost employers £2bn a year, it said, while the planned increase in the top band of income tax for high earners would act as a deterrent for highly skilled foreign workers coming to work in the UK.

They said:

“We are disappointed that these initiatives are both temporary and short-term, and that much of what has been given today will be clawed back post 2011,” said Phil Orford, chief executive of the FPB.

FSB national chairman John Walker said: “Many of these measures, such as giving businesses longer time to pay bills and offsetting losses, will give small businesses a welcome breather from the taxman.”

Bibby chief David Robertson added: “It is disappointing that it has had to take a global economic crisis for measures to support their stability and growth to be put in place.

“The various reliefs offered to business are sensible, but the economic picture remains turbulent,” added ACCA’s Roy-Chowdury. “Will this year’s PBR be seen as a fair and responsible means of getting the UK back on track economically?”

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By News Desk  on   Nov 25,2008

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Keywords

pre-Budget report    Alistair Darling    small business    FPB    FSB   

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