Local News

4 April 2012

Budget not helping Alton businesses get fit for growth

In this Olympic year, Alton SMEs were hoping that the Budget would help them get their businesses in better shape. At the Haines Watts annual review of the Budget however, over 100 SME participants gave it a losers’ certificate.

David Smy, Haines Watts’ Partner from the Alton office, along with Stephen Edwards and Julie Bryant, presented the review.

Afterwards, when asked if they thought the Budget offerings would help SMEs get their businesses fit for growth, a near majority of the participants voted no. They felt that many of the hurdles to business growth remained and that small businesses were losing out.

Business rates, which go up by 5.6% from April, and fuel duty – which will continue to go up by three pence in August - will hit many hard.

David Smy said, "The introduction of ‘credit easing’ – the Government’s ‘National Loan Guarantee Scheme’- is supposed to encourage growth by increasing bank funding to SMEs. The scheme offers a subsidy on borrowing to small businesses with a turnover of up to £50m. They will be able to access loans with interest rates one percentage point lower than they would normally receive. This won’t help many however, because it assumes the bank will grant the loan in the first place and whilst some medium-sized businesses are getting loans, many smaller ones are still being turned down.”

There are some winning points in the Budget for SMEs: On the issue of Tax Simplification, there is a change to how small firms will calculate their tax payments. From April 2013, companies with sales of up to £77,000 per year will be allowed to change their accounting from the established accrual method to a cash basis. They will only have to pay tax on the amount of money they’ve actually received, rather than on total orders. This will help small firms, because they will no longer have to pay tax on received orders for which they haven’t yet been paid.

The Chancellor also confirmed that the Government is planning to integrate income tax and national insurance, so firms don’t have to run two different payroll tax systems.

Lastly, small firms which have patented a product will be able to benefit from the new Patent Box from April 2013 – a reduced level of corporation tax on profits attributed to patents and other types of intellectual property.

So whilst there may be some winners in this Budget, it looks like we’ll have to wait until the Olympics if we want to see some true winning form.

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