The measures taken in the budget have been criticised by the small business community as helping bigger companies at the rather than the smaller ones. With many SMEs struggling to find finance from the banks, alternative funding solutions are needed order to free up cash flow. The 2012 budget did not do enough to help this, despite some improvements in the tax system.
The Chancellor has been criticised for failing to bin the proposed 5.6% increase in business rates, due to come into force this April. There will also be no help with corporation tax for those companies with earnings of under £300,000 per year.
If your business turns over under £77,000, however, you could benefit from a simplified tax system.
Tax returns will become simpler with cash-based accounting. This will make the process more straightforward for around 3 million businesses. However, an increase in fuel duty will further hit small businesses, especially in the transport sector, for which fuel has become a major expenditure.
Osbourne reasserted his plans for the National Loan Guarantee Scheme, supplying £20bn credit to the small business community. The system for expenses on the business use of cars, motorcycles and homes is also being investigated.
However, this budget has been seen as a ‘big business budget’ rather than benefiting smaller companies who are suffering most from lack of funding. Whereas GlaxoSmithKline has commended the measures in cutting the 50p tax rate, announcing its plans to create a thousand new UK jobs, there’s no huge boost to small business aside from some simplifications.
Simon Walker, the director general of the Institute of Directors, commented that, “While any tax reduction is welcome, the chancellor has not done enough to free business from the burdens and barriers that are holding economic growth back.” Some of the simplifications were a step in the right direction, but were not far enough or fast enough.
If your business is disappointed by the budget, then you definitely won’t be alone.