Funding support, reduced tax, investment incentives and a possible simplification of employment law – just some of the positive initiatives announced by the chancellor in the autumn statement. Here we cover some of the best bots in more detail.
Funding support
The chancellor took this opportunity to further outline his plans to help small businesses access much-needed funding with the ‘credit easing’ scheme, which will be facilitated by the launch of a new National Loan Guarantee Scheme.
Credit easing is a mechanism for the Treasury to pump credit directly into small businesses. The government will effectively use its preferential borrowing rates to lower the rates that small businesses pay for their business loans by up to 20%.
Under this scheme, businesses with a turnover below £50 million will be eligible to apply for new business loans and overdrafts. The government expects it will lower the interest rates charged to businesses by 1%.
The government has set a ceiling of £40 billion for the credit easing programme, with half of this available in the first two years. It will also make an initial £1 billion available through a Business Finance Partnership, which will invest in small and medium sized businesses in the UK through non-bank channels. The National Loan Guarantee Scheme should be up and running in January 2012.
Corporation Tax
Corporation tax is set to be cut from 26% to 25% in April 2012. This means the tax on business has fallen from 28% since the coalition formed, giving Britain one of the lowest rates of a G7 nation.
Investment incentives
Investors who lend to small firms were also handed a huge incentive by an income tax reduction.
The Seed Enterprise Investment Scheme allows people who lend up to £100,000 to a start-up or small firm (those with fewer than 25 staff, and assets worth less than £200,000) to receive a 50% reduction in the income tax paid on their investment – no matter what rate of tax they currently pay.
There will also be a Capital Gains Tax exemption on gains realised in 2012–13 and then invested through The Seed Enterprise Investment Scheme in the same year.
Planned changes to Employment Law
The government plans to complete a call for evidence on the impact of reducing the collective redundancy process for redundancies of 100 or more staff from the current 90 days to either 60, 45 or 30 days.
It would also like to begin a call for evidence on two proposals for radical reform of UK Employment Law. Initially the government will seek views on the introduction of compensated no-fault dismissal for micro-businesses with fewer than 10 employees. Stage two will be to look at moving to a simpler, quicker and clearer dismissal process.
Youth employment
The government will introduce a Youth Contract worth a total of £940 million over the Spending Review period. This will fund wage incentives for 160,000 young people to make it easier for private sector employers to take them on, and at least 40,000 incentive payments for small firms to take on young apprentices.
So while we’re not pretending everything’s rosy by any means, there are some positive developments that will make a genuine difference to our clients. George Osborne reiterated the pivotal role that small businesses will play in the recovery, and it’s good to see practical initiatives being introduced that will help make that happen.
To find out how the statement affects your business, please contact our Business Advisory Department.
