Pre-Budget report round-up

It was one of the most politically self-conscious pre-Budget reports we've seen for years: dubbed a 'pre-election report' by shadow chancellor George Osborne, Alistair Darling's delivery certainly marked the beginning of a fierce election campaign.

But what will it mean for small businesses? Experts had predicted the pre-Budget report would contain a raft of measures which, given the likelihood of the Conservatives coming into power halfway through next year, were unlikely to come to fruition. Here's our round-up of the measures announced today:

VAT

  • Darling announced he would bring an end to the extension of the 15% VAT rate announced during this year's Budget, taking it back up to its original level of 17.5% on January 1. Speculators had warned he might try to raise it to 19%, but it seems their fears amounted to nothing. Expect a groans from retailers, though, who will once again have to scramble to change their pricing in accordance with the new rate.

Time to pay scheme

  • Darling said the government's Time to Pay scheme, which allows business owners to spread their tax payments out, has helped over 160,000 businesses since it was launched in February. He recognised the need to continue this scheme, saying it would be 'extended for as long as it is needed'. Good news for those struggling to pay their tax bills.

Empty properties

  • Empty property rate relief, which caused controversy last year when it was scrapped for exactly 12 months and then resurrected with a higher threshold, has been further extended so commercial properties with a value of less than £18,000 will be exempt from empty property rates - which, according to Darling, will be a saving grace for 70% of businesses. Hmm.

Corporation tax

  • The chancellor chose to delay the rise in corporation tax for smaller companies, due to take place in April, for a second time. The rise, from 21%-22%, was first announced in October 2008, but was put off earlier this year. Darling says the delay will help 850,000 businesses - but according to the Daily Mail, it will also cost the government £500m.

Employment

  • Darling was very proud of the UK's employment record, saying there were just 1.6m claimants - but given that 10% of the workforce are predicted to be out of work during 2010, he still has work to do. Nevertheless, the chancellor promised starting next month, 18-24-year-olds will have guaranteed work or training after 12 months out of work, while over-50s will receive 'specialist and tailored support'.
  • A half-percent hike on National Insurance contributions for those earning more than £20,000 was also put forward. This has outraged small business owners. Bulldog's Rhodri Ferrier called it a 'real blow'. "This will be a major tax on jobs just as the economy is predicted to grow," he said.

Investments

  • Darling announced a variety of investment funds, including £30m to help industrial businesses in Teeside, a £500m Growth Capital fund to 'invest specifically in small business' and the extension of the Enterprise Finance Guarantee (EFG), which will guarantee £500m worth of loans to businesses on top of the £1bn already offered this year.
  • Plans to fund clean technology were also announced: £160m towards the innovation investment fund and the Carbon Trust's VC scheme, as well as £90m towards the European Investment Bank's 2020 fund, which finances green infrastructure projects.

So there we go, mixed news from Westminster. The battle lines, though, have just been drawn. Expect things to hot up over the next few months.

 

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