Budget 2011: Small businesses given Budget boost
A SERIES of measures were unveiled by Chancellor George Osborne aimed at making Britain “the best place in Europe to start, finance and grow a business”.
The Chancellor announced plans to increase the both the size and reach of the Enterprise Investment Scheme, increasing the tax relief that investors can reclaim through the scheme from 20% to 30%.
The amount that can be invested in a single company is also set to increase by 400%.
Entrepreneurs’ tax relief for owners selling smaller companies has also been doubled to £10m, and a new campaign known as Start-Up Britain promoting enterprise “by entrepreneurs for entrepreneurs” is also set to be unveiled next week.
Osborne said that during the past decade Britain had dropped from 4th to 12th place in the global competitiveness league, having been overtaken by Germany, Denmark, Finland and the Netherlands, among others.
He said that the cost to business of new regulations introduced since 1998 was around £90bn.
He pledged to cut £350m-worth of specific regulations, including dual discrimination rules introduced as part of the equality act, a pledge to implement Lord Young’s suggestions on simplifying Health & Safety rules and restrictions on no-win, no-fee cases on employers.
“And from April, we are going to impose a moratorium exempting all businesses employing fewer than ten people – and all genuine start-ups – from new domestic regulation for the next three years.”
Other measures to help smaller firms included an extension of the current rate relief holiday. It was set to end in October, but the Chancellor pledged an extra £370m of funding to extend the relief until October 2012.
Money laundering obligations on professional services firms are set to be eased, new export credits will be launched, a Technology and Innovation Centre will be introduced to encourage manufacturing innovation and the Research and Development Tax Credit will double to 200% this year and 225% next year.
Neil Holyoake, tax partner at Ernst & Young in Leeds, said: “In a Budget aimed to kick start entrepreneurial activity the Chancellor has announced a range of measures to encourage and stimulate start ups and emerging businesses in the UK.
“Access to funding is a key factor in the growth cycle of entrepreneurial businesses – allowing non-domiciled individuals to remit income for the purposes of investing in UK business is a welcome stimulus for private overseas investment into UK businesses.
“The increase in the rate of tax relief for investors under Enterprise Investment Schemes (“EIS”) to 30%, raising the total level of investment which can be raised by EIS and extending the size of company which will qualify for EIS is designed to further encourage private investors to fund private enterprise.
“For successful entrepreneurs the rewards of their labours will be significantly less eroded by taxation with the doubling of Entrepreneurs’ Relief to a lifetime limit of £10m.”
