Small business welcomes PBR
BUSINESS leaders will have breathed a sigh of relief today as Chancellor Alistair Darling delivered much anticipated cuts and initiatives including access to £7bn in funding.
Describing SMEs as the “engine room of the economy”, Mr Darling said the raft of measures was designed to help struggling firms “immediately”.
He stressed that business was a priority and that the government was commited to supporting business through “this crisis”.
As well as exemption for foreign dividend in 2009, there will be empty property tax relief for all vacant properties valued under £15,000.
Firms will be able to negotiate tax repayment programmes with HM Revenue and Customs (HMRC) for all business tax at levels companies can afford and for as long as is needed.
Mr Darling confirmed that £4bn in European funding had been secured to immediately improve small firm’s access to finance in addition to the creation of a £1bn small business finance scheme, which will enable firms to apply for £1,000 to £1m in funding at reasonable rates.
Exporters will also be able to improve their short-term working capital with a confirmed £1bn worth of financial support.
The Chancellor also said that recapitalisation of the banking sector was beginning to take effect using RBS’s recent assurance that it wouldn’t increase SME overdraft rates as an example.
“We see this as a benchmark for all UK banks,” he said.
Other measures that will be seen to make a difference include the predicted 1% rise in small business corporation tax.
However, in addition to the suspension the Chancellor announced that firms would be able to set losses of up to £50,000 against profits recorded for the last three years – a move he claimed would help 75% of SMEs and wipe out losses for 90%.
Amid the good news however is a top rate tax rise of 45% and a hike in National Insurance contributions of 0.5% from 2011.
Duties will also increase on alcohol, tobacco and petrol to offset the 2.5% cut in VAT from 17.5% to 15% for 13 months – which will come into effect on Monday.
Mr Darling however remained optimistic for economic recovery although he said that the UK’s growth rate would be between minus 0.75% and minus 1.25%, down from from the 2.5% forecast in March – the biggest ever revision on record.
In a speech that began with the admission that Britain faced “exceptional” economic circumstances, he went on to add that the economy would recover quickly, that recession would be shallow and that the global economy would double over the next two decades.
