PRE-BUDGET '08: Government increases support for small businesses
24 November 2008
Author: Rupert Saunders
The Government has recognised the vital role played by SME businesses in maintaining economic activity during a recession and the unique pressures that many small businesses are under.
A series of measures to improve access to funding and to defer payment of some taxes for firms in difficulties will go some way to offset general disappointment at the increase, from April 2011, of national insurance contributions.
There has also been a deferment by one year of a planned increase in small business corporation tax that was due to take effect in 2009/10.
To help SMEs with working capital and investment needs, the Government, with Regional Development Agencies' (RDAs) support, will launch the Small Business Finance Scheme early in 2009 - a new temporary guarantee scheme to enable up to £1bn of new Government-supported lending by banks.
As more businesses experience worsening cash flow positions, there will also be a new Business Payment Support Service to allow businesses to spread the payment of corporation tax, VAT, PAYE, income tax and national insurance contributions. Businesses needing more time to pay an outstanding tax bill can call a dedicated phone service to agree arrangements tailored to need.
To further help the cash flow position of businesses that have recently become loss-making, the trading loss carry-back for businesses will be extended for a temporary period from one to three years, for up to £50,000 of losses.
The Chancellor also made a point of welcoming a recent decision by the bank RBS not to increase small business overdraft charges.