George Osborne’s Budget for “makers, doers and savers” has included a number of initiatives targeted at SMEs, including extra grants for apprenticeships, a rise in R&D tax credit, doubling the annual investment allowance and making the Seed Enterprise Investment Scheme a permanent fixture.
Among the promises made by the chancellor of the exchequer was his pledge to help businesses invest by doubling and extending the annual investment allowance to £500,000 from the start of April.
This move, he said, will cost the government £2bn but will ensure that “99.8 per cent of businesses get a 100 per cent investment allowance”.
Mr Osborne also doubled apprenticeships and extended grants for smaller businesses to support over 100,000 more, extended R&D tax credit from 11 per cent to 14.5 per cent to boost loss-making start-ups and bowed to pressure to make the successful SEIS permanent.
The announcements were met with a mixed response from SME representatives, with some praising the changes and others complaining that the initiatives ignored the biggest challenges facing smaller-sized businesses.
Xenios Thrasyvoulou, founder of the online freelancer marketplace PeoplePerHour, said: “Apart from making it more affordable to hire under-21s by removing them from jobs tax and increasing the annual investment allowance to £500,000, there was not much else to give
There was not much else to give aspiring small business owners any confidence that the government has their best interests at heart.“SMEs are the backbone of the economy and make large contributions to growth and lowering unemployment, yet they pay the same VAT, corporation tax and income tax as large corporations. Unless bigger and more fundamental changes are made to tax structures and business education little will change.”
But John Cridland, director general at the Confederation of British Industry, was more positive and said that several initiatives offered a “shot in the arm for many medium-sized businesses”.
The CBI, he added, was particularly pleased with changes made to the annual investment allowance, the permanent arrival of the SEIS, which he claimed would “spur greater use of equity finance in small firms”, and the rise in R&D tax credit, a move it said would “boost early stage, innovative businesses”.
The CBI’s enthusiasm was matched by the Forum of Private Business, whose chief executive, Phil Orford, was impressed with Mr Osborne’s decision to increase apprenticeships. He said: “Ensuring small businesses have the skills they need is essential to creating sustainable growth.”
Mr Orford was equally content with the decision to make the SEIS permanent, but warned of the importance of signposting further sources of finance in the event that it becomes outgrown.
Adviser view
Paul Richardson, managing director for Surrey-based Concept Financial Planning, said: “It is all good noise, but it is just noise. I hope this gives the opportunity to young people to see that a degree is not the only way to get a qualification – with tuition fees rising – hopefully this is offering choice for the young. The questions I would be asking is, does this make the UK more competitive and attractive? Is Mr Osborne going to achieve his aims in terms of doubling the investment allowance and making SEIS permanent. I hope it does.”
