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Firms and tax experts have welcomed moves by the chancellor to help entrepreneurs, including the deferral of the 1p rise in the small companies’ rate of corporation tax.
The Federation of Small Businesses (FSB) trade body today claimed Alistair Darling’s decision, announced in the pre-Budget report, as a ‘victory’ for the organisation: one that ‘will give small companies a real helping hand, giving them the chance to expand and invest, and to grow out of the recession with confidence’.
'This is a positive move that will impact about 850,000 small companies,' said Tom McGinness, head of middle market tax at KPMG.
The PBR also included the lowering of tax to 10% from 2013 on all profits derived from UK-registered patents, which the FBR called ‘good news for innovative businesses’ that will encourage entrepreneurialism.
Patrick Steven, tax partner at Ernst & Young, also acknowledged the new patents tax as a ‘piece of good news’, but he added a note of caution for small businesses.
‘The so-called patent box echoes the systems of other countries, but this only addresses one element of intellectual property. Many had hoped that this rate would apply to income from intellectual property and could still leave the UK at a competitive disadvantage,’ he said.
As well as positives in the PBR, commentators also saw a negatives in the shape of the promised increase in National Insurance by 0.5% in 2011.
It was described by national chairman John Wright as ‘an attack on jobs’.
He added: ‘In a survey of FSB members this year, 44% said a cut in payroll taxes would help them take on more staff, so this is extremely damaging for employment in the UK.... This pre-Budget report should have encouraged and rewarded job creation in 2010, rather than imposed this tax.’
Michael Carter, a partner at Addleshaw Goddard, said that 'NIC is again being used as an easy means of raising tax income from employers and employees.
'In everything but name this is a 1% increase in income tax.'
