Pre-Budget Report 2009 - Small Business; Darling's Christmas present
Deferral of corporate tax rate scheme to impact 850,000 businesses
Wednesday, 9 December 2009
Commenting on today's announcement Tom McGinness, Head of Middle Market Tax in London said:
"The Chancellor presented a welcome pre Xmas message for small businesses today. Although there were no new measures, there were further deferrals or continuation of already in place schemes. Overall I think it is an encouraging PBR for small businesses, especially start ups.
"The key announcement was a deferral of the increase in the small company's corporation tax rate which was due to increase by 1% on 1 April 2010. This is a positive move that will impact c850,000 small companies.
"Further positive news came with the extension of the Time to Pay service. This has so far been used by 160,000 businesses and been a vital lifeline for many small businesses, allowing them to continue to trade whilst deferring over £4bn of tax.
"Another positive change was further help for companies in the innovation and technology sector who spend on R&D with the announcement of a proposed reduced tax rate of 10% from 2013 for those companies that derive income from UK patents. It will be important for any small businesses impacted by this to comment during the consultation process.
"Finally, the Chancellor acknowledged that small business continued to need support with financing. He made an additional £500m of lending available to small and medium enterprises through the extension of the Enterprise Finance Guarantee and by creating a new capital growth fund.
"On the downside however he also confirmed the increase of VAT rate back to 17.5% from 1 January 2010 and also announced a further 0.5% increase in employers and employees National Insurance from 6 April 2011. He had already announced a 0.5% increase in the 2009 Budget so this means that Employers NI will rise to 13.8% which will clearly be a significant impact to small employers.
"Overall though the measures are welcomed and should help smaller businesses continue to deal with challenging economic conditions and make the most of those fragile green shoots.”
Ends
Pre-budget report media hotline: 0207 694 8773
For further information please contact:
Emma Murray : 020 7694 6506
Follow us on Twitter: http://twitter.com/kpmgbudget
About KPMG: KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with 11,500 partners and staff. The UK firm recorded a turnover of €2.2 billion in the year ended September 2008. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 148 countries and have more than 113,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. KPMG International provides no client services.