Small BusinessES
PRESENTING himself as the champion of people who aspire to build businesses, George Osborne said small firms would be the biggest beneficiaries of a flagship Budget measure to cut the costs of employing staff.
All firms and charities will be entitled to a £2000 Employment Allowance towards their employer National Insurance Contribution (NIC) bills from April 2014.
Mr Osborne said the measure would mean 450,000 small UK firms will not have to pay any employers' NIC.
This is usually payable at 14% on wages and salaries.
Following longstanding calls for the Chancellor to make it easier for small firms to create jobs in Scotland, the measure was welcomed by experts.
Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: "This is one of the major highlights of the Budget from a business perspective.
"The move will directly reduce the cost of taking on new members of staff for smaller businesses and this is vital if we are to foster business growth and tackle unemployment."
Mark Houston, managing partner in the Glasgow office of Johnston Carmichael chartered accountants, said the £2000 allowance could provide a significent reduction for many small firms.
He noted the allowance will be claimed through the normal payroll reporting process.
It looks more straightforward than the scheme to provide NIC holidays for start-ups that was included in George Osborne's first Budget in June 2010, which has had limited take-up.
Mr Houston also said the accelerated reduction in Corporation Tax, to 20% from April 2015, may help a fair number of small businesses.
This will bring the standard rate in line with that paid by small companies.
Many small firms that operate through groups get only marginal relief from the higher standard rate, due to fall one percentage point to 23% in April, under the existing scheme.
The Federation of Small Businesses (FSB) said the rate cut may encourage larger firms to buy more from minnows.
Colin Borland, the FSB's head of external affairs in Scotland, said: "We hope the movement on Corporation Tax results in some supply chain benefits for the country's smaller firms."
Business organisations also applauded the Chancellor's decision to scrap the 3p per litre increase in fuel duty. The move is due to take effect from September.
The Scottish Chambers of Commerce said this would mitigate against cost rises for firms that rely on the roads network and for which transportation costs are a major factor.
The Chancellor also announced a series of measures that were intended to make it easier for firms to raise money.
These include the abolition of stamp tax on shares for companies listed on growth markets like the AIM stock market from April 2014 and an extension to the Seed Enterprise Investment Scheme for early stage firms. Other tax changes are intended to encourage employee ownership.
The Chancellor talked about extending the Funding for Lending Scheme and said the Government would proceed with launching a new Business Bank.
In the Budget document the Treasury said the Business Bank will deploy £1 billion of new capital, improve existing schemes and "develop a lasting new institution to support SME growth by the end of 2014". Ministers will provide details tomorrow.
There had been claims small and medium-sized enterprises were being starved of funding.
The FSB's Mr Borland said: "Businesses hoping the Budget would quickly unblock the small business finance market might be disappointed.
"The FSB in Scotland still looks forward to understanding how the state-backed Small Business Bank will operate in practice. However, some of the announcements suggest the UK Government is committed to developing realistic alternatives to the banks for the small business community."
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