Today the Chancellor, George Osbourne, announced a number of key changes that could affect UK small businesses.
Although a large number of people around the UK are unlikely to welcome the strict measures introduced by Mr Osbourne it has to be acknowledged that many of these areas needed taxing more severly to help reduce the country’s deficit.
Mr Osbourne stated that he believed many of the measures put in place were unavoidable and that it was “tough but fair”, however, he also added that the UK recovery would be lead by small businesses.
Key points from the Chancellor’s Emergency Budget:
1. VAT to increase by 2.5% from January 2011.
2. Capital Gains Tax (CGT) to increase from 18 – 28%, however, entrepreneurs will qualify for a reduced 10% tax rate on the first £5million of lifetime gains.
3. Corporation Tax to drop by 1% each year until it reaches 24% and tax for small businesses to drop to 20% from April next year.
4. Employer National Insurance Contributions (NIC) to increase by £21 per week from April 2011. However, new businesses will be exempt in “target areas” for their first ten employees during their first year of business.
5. The Enterprise Finance Guarantee Scheme (EFG) to be extended by £200million.
6. Introduction of a new £37.5million Enterprise Capital Fund to provide small businesses with additional equity finance.
7. Insurance Premium Tax (IPT) set to rise by 1%.
8. There will be a two-year pay freeze for public sector workers earning more than £21,000.
The British Chambers of Commerce believe that the UK Government have made the right decisions and have welcomed Mr Osbourne’s Budget with open-arms:
“The chancellor faced two challenges in today’s Budget: delivering a clear plan for deficit reduction and setting the stage for business to lead the UK’s economic recovery. We believe that the Government’s decisive moves to cut the deficit will have positive effects on business and investor confidence.”
David Frost, Director General of the BCC, added that the Chancellor’s announcement that the country is once again “open for business” will be welcomed by companies World-wide.
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