The Professional Contractors Group (PCG) expressed
disappointment that Gordon Brown’s Budget “failed to address the
major concerns affecting small businesses.” It had hoped – but not
expected – that Brown would abolish IR35, the tax that treats small
businesses in the knowledge-based sector as “disguised employees”
for tax and National Insurance purposes, thereby preventing them
from operating on similar terms to their larger competitors.
Jane Akshar, Chairman of the PCG, said of the Chancellor’s
speech:
"What he gives with one hand - he takes away
with another. This is a schizophrenic attitude to small businesses.
The Chancellor has reduced the corporation tax rates for small
businesses, while leaving many of them uncertain whether they will
pay tax under those rules or under the punitive IR35 regime.
Specific tax breaks for small businesses are meaningless while
there is legislation which prevents many small businesses from
operating as such. "
Stephen D Lane, tax Partner at Masons, the international law
firm behind OUT-LAW.COM, summarised yesterday's Budget as
follows:
"The Chancellor yesterday introduced a
largely technical budget with several new measures aimed at
businesses. These included a stamp duty exemption for transfers of
goodwill, further anti-avoidance stamp duty measures aimed at
commercial property transactions, a reduction in the commencing
rate of corporation tax from 10%to zero, the introduction of a flat
rate of VAT for small businesses and capital allowances of 100% for
investment in green technology."
In addition, employee's and employer's National Insurance
Contributions ("NIC") are to increase by 1% in the next tax year.
The big change is the introduction of a one per cent employee's NIC
charge on earnings and profits above the current employee's upper
threshold. Whilst the increase in NICs was perhaps to be expected
following recent comments by the Prime Minister, this does little
to stimulate growth within the economy and seems merely to be aimed
at increasing the tax take."
