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Budget 2010 – The ‘Budget for Recovery’
Halifax-based firm of chartered accountants, Lambert Roper and Horsfield, is advising clients to take note of this year’s budget and the provisions it has made to aid the growth of businesses across the UK.
Alistair Darling dubbed his third budget, and his last before the general election, as the ‘budget which would set out a route to long term recovery’ for the country’s weakened economy.
A fundamental feature of this plan is a package to increase investment in small and medium sized businesses.
The chancellor said that although the future is looking a little brighter, the economy is at a crossroads and is still in a ‘period of uncertainty’. However, he also said that he is keen to do all he can to help businesses through this difficult time, with a list of implementations aimed at companies of small and medium stature.
Darling outlined plans to provide £2.5bn in support for small businesses to boost skills and innovation, as well as the doubling of the small firm investment allowance from £50,000 to £100,000.
Part of the programme to help boost innovation in enterprise is a plan for everyone in the UK to have access to broadband internet, with a view to support and encourage digital business development.
The relief on capital gains tax for entrepreneurs will also be doubled, and there will be a one year cut in business rates from October, meaning that some 500,000 companies will benefit from a tax saving.
Darling said that although the UK is slowly heading away from the dark times of the recession, growth cannot be taken for granted. He acknowledged that the Government must play its part in helping businesses to grow and develop, and that access to finance is vital in order for this to be possible. To this end, the Chancellor announced that over the next year he has agreed with RBS and Lloyds banks for them to lend at least £94bn, with a minimum of half going to small to medium sized businesses.
Continuing with the theme of aiding SMEs, Darling also announced plans to create a new investment corporation – UK Finance for Growth – designed to oversee the Government’s £4bn range of support services for businesses. He also promised to increase the number of Government contracts that are given to small-medium sized firms by 15%.
Other points worth noting include the fact that the Inheritance tax threshold will now be frozen for four years, and there is a predicted growth of 1-1.25% for the UK economy in the next year, with a downgraded growth forecast of 3-3.5% for 2011.
Some may also be relieved to learn that there were no planned changes to VAT or income tax announced this time around.
Nick Frost, a director of Lambert Roper and Horsfield, said: “Small to medium businesses have faced a tough couple of years, so it is potentially good news that the Government’s focus now seems to be on helping them to grow, with the aim of aiding the economy’s recovery. Some of the planned changes could mean there are some positives ahead for the country’s smaller enterprises.
“However, the Chancellor also announced a series of moves to try and tackle tax evasion, which some companies may see as a blow to tax planning which has the potential to result in higher costs.”