Posted: Wednesday, 5 December 2012 @ 17:30
There are certainly some measures in the Chancellor’s Autumn Statement that will help SMEs. As always, however, the devil will be in the detail (which remains to be seen) and much will depend on how some of the new measures are implemented. There are some measures that could help increase investment and growth, as long as they are handled well.
In summary, the measures that will really affect SMEs were as follows:
Corporation tax. To be reduced to 21% in April 2014.
A new Business Bank to be formed with £1 billion worth of capital. If this bank is genuinely willing to engage with more risky and longer-term lending to SMEs, this could be the boost that is so sorely needed. New businesses, especially in the technology sectors, are where our future prosperity will come from but are usually considered too risky by banks for them to invest in. Only time will tell whether the new Business Bank will help here. Also, existing businesses require funding for investment and growth and are being held back by the lack of funding. This Business Bank, coupled with the increase in the AIA (see below) could certainly help.
A temporary two-year increase in the Annual Investment Allowance from £25,000 to £250,000 should be of real benefit. This is a tax-free allowance on certain investments and should encourage business growth by encouraging investment in new equipment, machinery and vehicles.
UK Export Finance will provide £1.5 billion in loans to help finance small business exports. Certainly many more small businesses could benefit from exporting there goods and services and this finance should help. I do think however that many small businesses just find the whole idea of exporting too complicated and some practical assistance would be beneficial.
The temporary doubling of the Small Business Rate Relief for another 12 months from April 2013 will also be another welcome measure.
Cancelling the fuel duty increase will also been seen as a relief for many businesses.
I am not sure whether the passing of funds to Local Enterprise Partnerships will help much. Such local quangos have never made too much of an impact on SMEs generally and I doubt that things will start to improve now without a real change of culture.
On the negative side, the National Insurance Contributions holiday will not be extended. What effect this will have on the ability of small businesses to take on new employees remains to be seen.
Overall, there are some good measures for SMEs and, if handled well, the new Business Bank coupled with the increase in the Annual Investment Allowance could help provide SMEs with the finance they so badly need. Only time will tell.
Gary Cousins
Business Solicitor
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Blog by Gary Pascual
Gary has been providing legal advice to shareholders, directors and business owners for over 25 years. Specialising in dispute resolution Gary is based in Birmingham with clients throughout the UK and overseas.
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