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Broadly positive reaction from enterprise sector

GEORGE Osborne has won a broadly positive reaction for his Budget from the small and medium sized enterprise sector, although some experts felt it may have provided more help for bigger fish than minnows.

Proclaiming he wanted to help Britain's makers and doers, the Chancellor provoked pleasant surprise in some quarters by announcing a big increase in the value of the benefits firms can enjoy under a flagship measure to boost investment.

The Annual Investment Allowance, which allows firms to offset up to £250,000 spending on plant and machinery against their tax bills, was due to end this year.

Mr Osborne extended the allowance until the end of 2015 and doubled the amount of allowable investment to £500,000.

The Federation of Small Businesses in Scotland said such Budget measures showed the UK Government wanted to support the growth ambitions of its members.

"A sustainable recovery won't be built on the shaky foundations of consumer debt," said its Scottish policy convenor Andy Willox. "It has to built on investment and, by doubling the Annual Investment Allowance, the Chancellor has shown that he understands this."

Mark Houston, Glasgow office managing partner of Johnston Carmichael chartered accountants, said the increased allowance would provide significant help for many SMEs.

"There are a lot who will spend more than £250,000," reckoned Mr Houston, who said SMEs in industries such as leasing could spend £500,000 or more on kit.

While many small firms will have limited budgets for equipment, Mr Houston said businesses of all sizes could have lost out if the allowance had lapsed totally.

He thinks small firms could enjoy significant benefits following the Chancellor's decision to allow loss-making firms to recover more of the money they spend on research and development.

Firms will be able to reclaim 14.5% of qualifying expenditure, compared with 11% currently.

"It's clearly a significant boost in particular to pre-revenue or loss-making firms," said Mr Houston.

Liz Cameron, chief executive of Scottish Chambers of Commerce, said the change to the tax credit and the decision to extend and increase the annual investment allowance were very welcome policies, which target a key need for businesses.

Mr Houston welcomed the Chancellor's decision to make the Seed Enterprise Investment Scheme permanent. The tax relief this provides can help early stage firms to raise equity funding.

However, experts seemed unclear how much benefit small firms would enjoy from Mr Osborne's proposal to provide £7 billion support for manufacturers with energy bills. Phil Orford, Chief Executive of the Forum of Private Business, said: "This was a budget that offers some help to all levels of business, with perhaps a slight focus on the mid-size energy intensive and manufacturing businesses, rather than the very small ones."

The FSB's Mr Willox said: "Our members will closely scrutinise the proposals to give some relief to businesses facing spiralling energy costs, though we still need to see more competition in this marketplace and more protection for small private sector consumers."

Scottish Chambers was pleased the Government is to double the amount of lending support it provides for exporters to £3bn. It said this would help many businesses looking to expand internationally.

But the organisation said that the Chancellor could have done more to help firms facing high fuel and travel costs.

The organisation applauded the decision to reduce Air Passenger Duty on some long haul routes but said the UK would still have the highest such taxes in Europe.

The burden falls particularly on Scotland's airports.

While Mr Osborne shelved the increase in fuel duty due in September, Scottish Chambers said a sensible long-term plan to relieve the burden of fuel taxes was needed.

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