A business budget designed to help UK SMEs

Companies expected to benefit from simplified reporting and legislative relief 

Measures announced in the Chancellor’s 2011 Budget will help to facilitate growth amongst UK SMEs as the economic recovery continues to take shape, according to Martin Walmsley, head of debtor insurance at Lloyds TSB Commercial Finance.

The headline changes announced on 23 March include a reduction in corporation tax, the creation of 40,000 new apprenticeships, a three-year freeze on new regulations for small businesses and the removal of large amounts of punitive legislation.

Other key measures incorporate the simplification of tax reporting systems, as well as the controversial 1p cut in fuel duty and the accompanying ‘fair fuel stabaliser’.

The changes also comprise an extra year's small business rate relief, increased funding for research and development tax credits, and doubling the rate of Entrepreneurs' Relief to £10 million.

Martin Walmsley commented: “This year’s Budget is strongly geared towards reducing the legislative and financial pressures on UK SMEs in order to support growth in the wider-UK economy. While it will take time to understand how these measures impact businesses in practice, they should go some way to helping companies operate more efficiently.

“A key move is the proposed simplification of company tax reporting which, it has been suggested, has become too exacting and exhaustive. In a similar vein, the Government’s efforts to reduce red tape, in particular surrounding health and safety, and discrimination legislation, will also be widely welcomed by companies.

“Other changes, including the exemption of start-ups and companies with less than 10 employees from meeting new domestic legislation for the next three years, will greatly reduce the pressure on young companies against the uncertain if improving economic backdrop.

“Despite these positive measures, late payments and insolvent debtors remain a key concern in the current business environment, and can have a dangerous knock-on effect on businesses’ cash flow. In order to safeguard issued invoices, a credit insurance policy is recommended to provide peace of mind and protect up to 90 per cent of their value.”

Budget 2011: A snap shot for UK SMEs

  • Business Rate Relief holiday for small businesses extended for 12 months
  • The abolition of selected tax reliefs
  • Three year delay on the enforcement of new domestic regulations on companies with less than 10 employees
  • 21 new enterprise zones to be created, allowing start-up businesses in these areas tax relief and additional operation benefits
  • Entrepreneur's Relief to double to £10 million from 6 April 2011
  • Increase in research and development tax credits for SMEs
  • Fuel duty cut by 1p per litre
  • Launch of the Startup Britain scheme to encourage UK entrepreneurship
  • 40,000 new apprenticeships to be created
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