Mixed response for Pre-Budget Report's tax measures

Date: 10th December 2009

The Pre-Budget Report announcement that next year's planned 1p increase for small business corporation tax will not now go ahead has been welcomed.

According to the Federation of Small Businesses (FSB), the news represents a "victory" for the group, which previously campaigned for the increase not to be imposed.

Other measures affecting business contained in the Pre-Budget Report, which was delivered by chancellor of the exchequer Alistair Darling in parliament yesterday (December 9th), include an extension to the £1.3 billion Enterprise Finance Guarantee fund.

This could assist small businesses in search of new credit who might be turned away from banks due to the credit crunch and recession.

However, the FSB criticised the Pre-Budget Report plans to increase employers' National Insurance contributions by 0.5 per cent from April 2011.

John Wright, the group's national chairman, said: "Holding off the planned 1p rise in small companies' corporation tax is a victory for the FSB and will give small companies a real helping hand, giving them the chance to expand and invest, and to grow out of the recession with confidence."

Another tax change included in the Pre-Budget Report was confirmation that VAT would revert to its usual rate of 17.5 per cent from January 1st 2010.

The sales tax is currently charged at 15 per cent as part of a temporary government economic stimulus measure.

Posted by Anthony Burns