Last week saw the reveal of the Chancellor’s Emergency Budget. Now that some time has passed, it is possible to look beyond the knee-jerk reaction of the media and determine what it will really mean for small businesses in the UK.
Although the Budget involved much belt tightening across the board, it does appear that small businesses have got off with the least amount of punishment from the Chancellor. George Osborne gave very few handouts last week, but the ones that he did offer usually seemed to benefit small businesses in some way.
Probably the main highlight of the Budget for small business was the cut in corporation tax that they received. From April next year, the rate will drop from 21% down to 20%. In addition to this, companies that make more than £300,000 will benefit from a staggered fall in the higher rate of tax over the next four years. This has clearly set out the tax framework for the duration of the Coalition Government and small businesses (at least, those that are still profitable enough to pay tax) have generally been encouraged by what was said.
New startups will receive a boost in the form of an extension in entrepreneur’s relief on Capital Gains Tax (CGT). The rate of 10% was extended to gains of up to £5m, from the previous £2m. Startups outside of the London area will be able to claim up to £5,000 in National Insurance contribution relief on the first ten people they employ. This was clearly a Budget aimed at making life easier for people who are prepared to work hard at creating their own wealth.
However, it has not received universal acclaim from the small business community. The VAT hike has come under particular criticism from organisations like the FSB (Federation of Small Businesses). They believe it is likely to hurt small retailers the most, whereas large companies will just absorb the cost.
How was the Budget for you and your small business? Get in touch, we’d love to hear.