Small business and the Budget: What was in it for them?

• A temporary increase of 20 per cent in the amount of finance available through the Small Firms Loan Guarantee Scheme. The Government has also relaxed rules on the age of the company allowed to use the scheme.
• The Chancellor promised to work with banks to look at ways of helping small firms to access the most appropriate forms of finance, including “mezzanine products”. These products are positioned between equity and bank debt in terms of risk. The Treasury will provide an extra £30 million of Enterprise Capital Funds to help fund them. Robinson said that anything that supports new business was a good thing but that these changes were “not ground-breaking”.
• A new capital fund aimed at businesses run by women.
• An increase in the Enterprise Investment Scheme’s investor limit from £400,000 to £500,000 in any one tax year – subject to EU State Aid approval. The Government will also look at how best to simplify the scheme.
• An increase in the value of share options an individual can hold under the Entreprise Management Incentive scheme from £100,000 to £120,000.

Boost for public sector contracts

Darling wants SMEs to win 30 per cent of all public sector business in the next five years. To help meet that target he is setting up an advisory committee to look at ways of removing the barriers holding back smaller companies.

He announced free trial periods for all suppliers who register for the first time with Supply2Gov (a first portal on the route to public sector work). Firms who supply public services to the Government will be able to sell public sector invoices to debt specialists, making it easier for them to fund their work.

Cutting red tape

The Chancellor promised to cut red tape by reforming regulations and making tax simpler. Capital allowances will be reformed to let 500,000 businesses write off pools of £1,000 or less and the Treasury will look at how to simplify corporation tax calculations and returns for smaller companies.

The Treasury announced over 20 tax measures to simplify tax, including changes to the system for financial services and the charitable sector.

Richard Farnsworth, a tax director in the entrepreneurs and private companies team at accounts PricewaterhouseCoopers, commented: “The sentiment is laudable but we’ll have to see whether they can deliver.”

Green issues

The budget confirmed plans to push ahead with road pricing which will affect small businesses who need to travel. There will also be increases in car vehicle excise duty rates to penalise “gas guzzling” larger vehicles.

But Farnworth pointed out that, while this was aimed at the “Chelsea tractors”, it would hit small businesses in rural areas who need to drive a four-by-four vehicle or others who use an estate car to carry supplies.

The FSB expressed concerns about plans to make all non-domestic buildings zero carbon by 2019 because it could restrict their use by small businesses.

“The laudable aim to make all new non-domestic buildings zero carbon by 2019 must be handled carefully because it could restrict small businesses’ access to premises.”

Although the FSB was in favour of most of the budget announcements, Wright added: “These plans will need to be backed up with real action.”

Further information

HM Treasury: www.hm-treasury.gov.uk
PricewaterhouseCoopers: www.pwc.co.uk