Tax changes spark concern for small business

A small business lobby group is concerned about tax changes revealed in yesterday’s budget.

Government plans to hike VAT to 20 per cent from 17.5 per cent will hurt small businesses in the high street, according to the Federation of Small Businesses.

However, the FSB say they are pleased that there is some time to go before the increase takes place, with the change to come into play on 4 January 2011 and not on New Year’s Day.

The group say thatsmall businesses insurance on many items is a must for many, and the proposal to increase Insurance Premium Tax (IPT) from five to six per cent is a tax on responsible business and should be reversed.

While the Chancellor referred to stability in fuel prices, the FSB is concerned that proposals for a fair fuel stabilizer to control erratic movements in the price of fuel were not announced today.

John Walker, National Chairman, Federation of Small Businesses, said:

“The measures announced in the Emergency Budget will go a long way to reducing the deficit and will please the 93 per cent of FSB members who called for a clear plan on tackling the country’s debt.

“The increase in VAT to 20 per cent will however, hurt small firms who will have to pass the increase on to their customers, unlike big business which can absorb the cost.

“We welcome moves to give a national insurance holiday to start-up firms, but are concerned that with 70 per cent of firms operating below capacity, those businesses already trading will not be helped. We need to see a full reversal of NICs increases to fully offset the ‘tax on jobs’ which the previous administration initiated.”

Share with others...