“This will help SMEs who originally fell out of this
bracket to now benefit. Software companies will particularly
benefit, as a large number currently fall in to this category,”
said Tom Wills-Sandford, Deputy Director General of Intellect.
At the moment, businesses that grow over the headcount threshold
face a significant loss in benefit, often at a time when the cash
is still vital to their ability to grow.
Intellect believes that the changes will make a significant
difference to innovative businesses in the UK. It hopes that the EU
Commission will work swiftly with the Treasury so the country can
start seeing the improvements sooner rather than later.
The announcement forms part of a package of measures that the
Government hopes will push productivity growth in the UK.
Other announcements include:
- measures to reduce further burdens on business, including new
commitments from HM Revenue and Customs (HMRC) to reduce the
administrative burden of the tax system; introducing the Hampton
Review’s principles into law and a review of how the experiences of
large businesses can be taken into account in administering the tax
system (the Hampton Review looked at regulatory inspections and
enforcement);
- a comprehensive package of measures to enhance the UK’s
position as a leading location for inward investment, developing an
ambitious strategy for marketing the UK;
- promoting London as a world international centre for financial
and business services, with a new strategy to be developed and
implemented by a high level group representing the city’s key
interests by summer 2006;
- establishing a new International Business Advisory Council
comprising some of the world’s leading business people;
- a programme of organisational changes to UK Trade and
Investment, with the aim of achieving a fundamental transformation
of its effectiveness in marketing the UK;
- boosting access to finance to enable early-stage companies with
real growth potential to bridge the equity gap and progress through
to market, announcing a further £50 million in 2006-07 and £50
million in 2007-08 for the Enterprise Capital Funds scheme;
and
- taking forward the Government’s strategy for tackling the
long-term lack of supply and responsiveness of housing and property
and introducing Real Estate Investment Trusts to create greater
flexibility for investors.
According to Dr John Philpott, Chief Economist at the Chartered
Institute of Personnel and Development, the measures are much the
same as others the Chancellor has introduced since 1997.
“There is nothing to indicate that they will be more
successful,” he said. “The accompanying Treasury document on the
key drivers of productivity growth continues to overlook the
importance of people management and development. Welcome new
initiatives on work-related training, particularly those aimed at
women, are relatively small in scale, while the final
recommendations of the Leitch Review of skills are still
awaited.”
The Leitch Review was set up to work out what skills mix the UK
should have in 2020 in order to maximise its “economic growth,
productivity and social justice.”
According to Patrick Walker, UK head of indirect tax,
PricewaterhouseCoopers LLP, the Chancellor could have used his
speech as an opportunity to provide greater clarity on VAT.
“Recent European Court of Justice rulings have provided greater
clarity for UK and European businesses on how to manage their
taxHowever, it
is disappointing that the Chancellor of the Exchequer has not used
today’s Budget as an opportunity to announce how such decisions
will be implemented in practice, clarifying how businesses will be
expected to comply with UK law.”
