The Budget – Best For Small Businesses Says Accountancy Firm

Published on: 20 Mar, 2013
Updated on: 21 Mar, 2013

Claire Dee

by Business Writer – Claire Dee

Entrepreneurs and smaller businesses are the biggest winners from today’s Chancellor’s Budget, says the Guildford office of PKF Accountants & business advisers.

Jon Hills, a tax partner at the PKF office in Guildford, said: “The Chancellor didn’t have much room for manoeuvre in the Budget, but it’s clear that he’s tried to help small and medium-sized enterprises (SMEs) with the initiatives that he’s announced. Surrey and the South East is a real hub for the entrepreneurial community so this is particularly good news for the region.

“The reduction in employer national insurance contributions of up to £2,000 per business was one of the biggest surprises of the Budget. It remains to be seen if it’s enough to encourage SMEs to take on additional staff, but it will certainly be welcome by the owners of smaller companies in this tough economic climate.

Some welcome spring boosts for Surrey and the South East

“However, the initiatives designed to improve the supply of funding to SMEs are likely to prove to be the most effective measures in the longer term. Extending the capital gains tax exemption under the Seed Enterprise Investment Scheme (SEIS) is a smart move at a time when many businesses are struggling to get hold of debt funding from traditional sources. We’ve started to see interest from clients wanting to take shareholdings in SMEs through tax efficient schemes like SEIS, demonstrating that sensible tax incentives can help plug the funding gap provided the Treasury gets the balance right.

“For more established SMEs, the abolition of stamp duty on AIM (Alternative Investment Market) shares is another welcome move. A large proportion of AIM thrives in the region, so reducing the cost of capital in this way could provide a much-needed boost for businesses using markets like AIM to continue to expand.

“The Chancellor also announced that the main rate of corporation tax will reduce to 20% in 2015 and this is a very welcome development, giving the UK one of the lowest company tax rates among developed economies.”

The Chancellor also homed-in on the housing market, offering a substantial package of measures wrapped up as a new ‘help to buy’ plan which should make a substantial difference to the sector.

Jeff Jeffries, a partner and real estate expert at the PKF office in Guildford, said: “Surrey is fortunate in that its housing market has remained relatively buoyant throughout the challenging economic climate. But there are still those who struggle to gain that first step onto the property ladder.

“Interest rates may be low but that doesn’t help you buy a home if you can’t afford the deposit. Shared equity schemes are proven to work so extending substantial support for everyone buying a new home, not just first time buyers, is going to help get the market moving further.

“Setting a limit of £600,000 on the value of the homes that can enter the scheme will be welcomed by potential buyers here in Surrey and the South East. House builders, of which we have many in the region, will be able to increase their turnover of housing stock and this package should give them the confidence to expand their building programmes.”

A further mortgage guarantee scheme will also be launched from 1 January 2014 to help buyers to move home with only a small deposit by effectively underwriting high loan-to-value mortgages. The scheme will apply to existing as well as newly built houses and run for three years. Plans to build 15,000 more affordable homes and improve current ‘right-to-buy’ deals were also announced.

George Osborne revealed the government will allocate an extra £3 billion a year to infrastructure projects to encourage economic growth. The funds will be spent on roads, railways and other similar projects with the South East receiving £367 million of discounted borrowing for councils for infrastructure projects.

Jeff Jeffries concluded: “Overall, while Budget 2013 may appear unlucky for some, there have been some welcome spring boosts for Surrey and the South East, which will hopefully enable the region to maintain its label as the economic powerhouse of the country outside of London.”

Author contacts: Claire Dee, 07798 894520, claire.dee@clairedeecommunications.com