The proposals include:
Fuel Duty: The 3% rise will now be staggered with 1% in April, and further 1% rises in October and January 2011.
Business rates: These will be cut for one year from October to help both “fledgling companies" and established ones.
Business investment: The Annual Investment Allowance will be increased to £100,000 to help small businesses expand. A national investment body, “UK Finance For Growth,” will be set up to streamline and improve government help to small- and medium-sized companies. It will also oversee £4bn of support for business.
Capital gains tax: The qualifying limit for the lower 10% rate will increase from £1million to £2million.
Time to Pay: HMRC is extending this scheme by four years and setting up a dedicated helpline for second-time applicants.
The Chancellor said the move on business rates would result in a reduction for more than half a million small firms and 345,000 would pay no tax at all.
He also announced that RBS and Lloyds between them would provide a total of £94bn of new business loans, nearly half to smaller firms, over the next year.
Other measures include the establishment of a Growth Capital Fund, which will provide growing firms with private capital, the implementation of a five-day target for payments by public bodies and the creation of a Credit Adjudication Service with powers to overturn loan refusals.
Pros and cons
Adam Marshall, director of policy and external affairs at the British Chambers of Commerce (BCC), said that the 2.2% rise in the National Minimum Wage increase took some of the shine off a budget that had small and medium-sized businesses at its heart, particularly at a time when private sector wages are virtually flat and firms are struggling to avoid job cuts.
The Federation of Small Businesses (FSB) was disappointed with the NICs rise, but pleased with the announcement to take 345,000 small businesses in England out of the business rates system, which would be “a huge relief to small businesses on the High Street." It welcomed the introduction of a credit adjudicator.
Phil Orford, chief executive of the Forum of Private Business (FPB) praised the extension of the Time to Pay scheme, which "can be a lifeline for many small firms that are struggling with their cashflow.”
The Institute of Directors welcomed the increase in entrepreneur's relief for capital gains tax but criticised the failure to reverse the increases in the top rate of income tax and national insurance contributions. It added that doubling the amount of plant and machinery that can be written off in the year of purchase “will help some companies, but most will not benefit because their investment is smaller than the old £50,000 limit”.
Richard Lambert, director general of The Confederation of British Industry, called the moves "a series of modest but helpful changes,” but added that it is the fiscal decisions over the next 12 months that will really determine the UK's economic future.
