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Budget includes policies on SMEs

Published On 21 March 2007 at 14:36:05

Gordon Brown has published his 11th Budget and it includes some policies which will have a direct impact on small and medium-sized enterprises (SMEs).

In what is widely expected to be his last Budget before taking over as prime minister, Mr Brown revealed plans to undertake a major reform of the corporate tax system. This will include a reduction in the headline rate of corporation tax from 30 per cent to 28 per cent.

The chancellor also revealed that there would be a series of reforms which should simplify the capital allowance system.

In order to tackle the number of individuals artificially incorporating in an attempt to minimise their tax liability, Mr Brown said that the tax rate for smaller companies would be increased.

However, Chancellor Brown did promise to implement reforms to reduce the regulatory burden placed on SMEs. This will include measures to tackle concerns about workplace disputes.

Finally, the Budget contained several measures to encourage business innovation, including further enhancements to research and development tax credits, to encourage innovation.

Organisations that represent SMEs reacted cautiously to the chancellor's announcements.

The British Chamber of Commerce said that "the proposed reduction in corporation tax to 28 per cent is obviously welcomed, given the erosion in the UK's competitive position in recent years.

"But the decision to raise the tax rate on small companies in three stages, from 20p this year to 22p, in 2009 is regrettable."

 

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