Today’s Budget was given a cautious seal of approval by Britain’s business groups, with plans to ease the burdens of tax and red tape being particularly welcomed by small business lobby groups. However, in some areas, many felt Osborne’s measures didn’t go far enough.
GB outlines the key measures outlined in the Budget, along with the responses of business groups.
Introduction of a fuel duty stabiliser/reduction of fuel duty
Federation of Small Businesses (FSB):
“The introduction of a limited form of fuel duty stabiliser is welcomed – something the FSB has been calling for. The unpredictable nature of fuel prices damages growth for businesses across the UK – with a recent FSB survey showing that 62% of businesses are increasing prices, one in 10 laying off staff, a quarter freezing wages and 36% reducing investment.”
Regulation
Forum of Private Business (FPB):
“Providing it produces measures that actually reduce small firms’ administrative burden, a review of all existing business laws is both welcome and long overdue - as is a specific review of health and safety law with a commitment to scrapping all unnecessary health and safety red tape.
“The Forum is also backing the government’s announcement that all firms with 10 employees and under – both start-ups and established businesses - are to be given a three-year holiday on incoming red tape.
“However, the organisation is concerned that the moratorium will not apply to red tape stemming from EU law – which creates the majority of regulatory hurdles for small firms - and is also calling for similar regulatory relief for larger SMEs that have also been charged with creating the jobs set to be lost in the public sector.”
Mike Emmott, CIPD employee relations adviser:
“We are concerned about the moratorium on all new employment regulation for small firms for three years. The onus should be on government to bring forward only light-touch employment regulations that do good, not harm – irrespective of company size. A moratorium for the smallest firms is a dangerous precedent that risks creating a two-tier labour market, and could even at the margins act as a perverse disincentive for growth amongst firms considering employing the extra staff member that would bring them into the ‘regulated tier’ of the labour market.”
Extensions to the Enterprise Investment Scheme/Doubling of Entrepreneurs’ Relief
David Frost, director general, British Chambers of Commerce (BCC):
“Anyone who takes the risk of investing in a business should be able to reap the rewards. The doubling of Entrepreneur’s Relief to £10m, as well as improvements to the Enterprise Investment Scheme, will help bring more capital into promising companies.”
FSB:
“The extension of the Enterprise Investment Scheme and the doubling of Entrepreneurs Relief to £10m will provide a much needed shot in the arm for entrepreneurship in the UK.“
Tax simplification
Miles Templeman, director general, Institute Of Directors:
“It is sensible to consult on merging the operation of income tax and national insurance. But it seems that a simple merger of the taxes is not on the cards. We hope the government will still have the courage to explore the scope for radical simplification short of a full merger.”
David Frost, BCC:
“The merger of Income Tax and National Insurance would be a huge simplification for employers and save countless millions in administrative costs. We have campaigned for this for years – and urge the Chancellor to pursue this aim. He must consult widely to ensure we get it right first time.”
National insurance
John Walker, national chairman, FSB:
“The biggest opportunity missing from this Budget is by not extending the NICs holiday nationwide to existing businesses, which would really have provided incentives for small firms to take on more staff."
Corporation tax
FPB:
“While the Forum also welcomes the government’s continued commitment to reducing corporation tax overall, it is disappointed that small firms’ corporation tax bills are not being reduced by a similar rate to the higher level paid by big businesses, which the chancellor is now slashing by 2% in April – double the reduction that had been planned – and from 28% to 23% by April 2014.
“The Forum believes a number of opportunities have been missed for real root-and-branch tax simplification and radical reforms removing small firms from tax wherever possible – incentivising small businesses charged with leading economic recovery, rather than pandering to large companies. In its submission to the 2011 Budget the Forum called for the lower corporation tax rate to be cut to 17%.”
Small business rate relief
David Frost, director general, BCC:
“Unlike larger companies, small businesses are hit disproportionately by changes to business rates. Extending the small business rate relief holiday for another year will give many SMEs greater confidence and allow them to invest in growth rather than pay more to the Exchequer.”
FSB:
“For small independent retailers struggling with inflation and other VAT rises, the extension to Small Business Rate Relief for properties with a rateable value below £6,000 will help greatly.”
Apprenticeships
David Frost, director general, BCC:
“Almost seven in 10 apprenticeships currently take place within small firms and so the plan to add an additional 50,000 apprenticeships is a significant development for the small business community and young people alike.”
R&D tax credits
David Frost, director general, BCC:
“Businesses must be compensated for the high cost of investing in research and development, so the increase in R&D tax credits for smaller companies is an important step. Ministers must now ensure that small businesses do not face complex bureaucracy when trying to apply for these credits or this policy will fail to help.”
What the Budget should have included:
FPB:
“In particular, the organisation is concerned that simply lowering from £18 to £15 the threshold price of goods shipped via the Channel Islands on which no VAT is payable will not stop large companies exploiting Low Value Consignment Relief (LVCR).
“The Forum agrees with the pressure group Retailers Against VAT Abuse (RAVAS) that the real test is whether businesses that do not have offshore facilities can now compete on an equal basis with their counterparts on the Channel Islands. The answer for smaller retailers – including those selling CDs and DVDs which will still have to charge VAT – is clearly no.”