The Chancellor has backed small business with a budget that simplifies the tax system and cuts business rates says the Federation of Small Businesses.
A quarter of a million businesses will see a fall in business rates under the shake up while 600,000 small businesses will pay no rates at all as of April. The Government is also simplifying the administration of business rates, and from 2020, switching the uprating from the higher RPI to the lower CPI.
“In a Budget constrained by both the need to reduce the deficit and the economic outlook, the Chancellor has listened to our calls,” said Mike Cherry, policy director at the Federation of Small Businesses.
“In particular, FSB members have campaigned hard to make Small Business Rates Relief permanent, and expand it – and the Chancellor has heeded our calls, taking many small firms out of the system altogether. The combined measures announced on business rates – the single biggest tax cut in today’s Budget - will be viewed by our members as a welcome and important step on the road to fundamental reform. In addition, online retailers will benefit from steps to secure a level playing field for smaller online businesses on VAT.”
The pro-enterprise budget has come “just in time”, said KPMG.
“George Osborne has gone all out to win over small business owners,” said Jonathan Boyers, corporate finance partner and head of Enterprise for KPMG in the North.
“By lowering stamp duty and corporation tax while doubling the business relief rate for small firms, the Government is finally coming out on the side of small businesses. Better still the increase in the personal tax allowance and no movement on rumoured cuts to Entrepreneurs’ Relief, will help offset the abolition of dividend relief, incentivising small enterprises to keep growing.
“This support comes just in time, with small firms’ cash flows under pressure from pension auto-enrolment and the National Living Wage. With downgraded UK growth predictions and increasingly volatile global markets, 2016 could be a tough year for British small businesses, so they’ll need all the help they can get.
“The one big disappointment was we heard nothing on access to finance for young firms. On the same day Legal & General reported small businesses are still depending on credit cards and personal loans, this is a significant omission.”
The Chancellor has chosen to back business to “grow the economy” said CBI director-general, Carolyn Fairbairn.
“Businesses will welcome the Chancellor’s permanent reforms to business rates – taking more small firms out of the regime and changing the uprating mechanism from RPI to CPI, which the CBI has long been calling for,” said Fairburn.
“The reduction in the headline Corporation Tax rate sends out a strong signal that the UK is open for global business investment, and reforms to Interest Deductibility are rightly in line with international consensus.
“Changes to the tax treatment of losses will make it harder for larger scale-up firms and companies that have been through tough times to play their part in the recovery. ”
Fuel duty is being frozen for the sixth year in a row said Osborne, saving the average driver £75 a year and saving £270 a year to a small business with a van in “the tax boost that keeps Britain on the move.
“Freezing fuel duty will be universally welcomed by small businesses right across the country, ” said Cherry, who also welcomed the new devolution deals, alongside increased investment in roads, rail, and flood defences, ” which he said “should give a much-needed boost to the UK’s infrastructure. ”
The Government is giving the green light to High Speed 3 between Manchester and Leeds; funding the creation of a four-lane M62 and developing the case for a new tunnelled road from Manchester to Sheffield.
Osborne also outlined plans to upgrade the A66 and A69 and pledged £700 million to boost flood defences.
“Altogether, these measures should help to drive productivity and boost small business confidence levels, which have faltered recently in the face of a number of domestic policy and global economic challenges,” added Cherry.
The infrastructure commitments are a ‘bold step forward’ for the UK economy said Noam Handler, tax partner at EY in the North West.
“Today’s Budget rightly recognises the importance of infrastructure investment to the economy both in terms of connectivity and resilience. The packages and measures set out today are a bold step forward for continuing to improve the long overdue upgrading of public transport in London and accelerating the economic growth envisioned for the Northern Powerhouse, ” said Handler.
“With National Infrastructure Commission support and today’s funding, it looks like Transport for the North will now have the teeth to deliver a comprehensive transport strategy for the region.
“As most of this funding will be committed on a multi-year basis, the opportunity does present itself to look beyond inputs and to focus attention on measuring outcomes. For example, the reduction in unemployment, increases in social mobility and increases in productivity that this investment brings.
“The public and private sectors will need to continue to work together to secure innovative funding and delivery solutions to create smarter, more connected and resilient cities, which can support a united regional economy and a more prosperous UK.
“Now that Crossrail 2 has full Government support, it is critical that funding and delivery are progressed efficiently in order to gain the confidence of the travelling public.”