Changes to business tax levies introduced by Gordon Brown when he was Chancellor have cost 500,000 of the UK’s smaller companies an extra £2.4billion.
The figure, tabled by the Conservatives, is based on official records released in response to parliamentary questions about tax reforms made by the Prime Minister.
His decision to scrap the 0 per cent rate of corporation tax for firms with profits lower than £10,000 made 250,000 of the smallest traders liable for the SCR, now at 21%.
The liability is equivalent to wiping out ten months of profits, as the average company affected earns just £4,300 a year, and, overall, will net the state an extra £900m in tax.
The removal of the Marginal Starting Rate Relief also hit firms with annual profits lower than £50,000, a quarter of a million of which will pay £6,194 extra by 2009.
Releasing the data, the Conservatives said both groups of firms then faced a “second wave” of tax rises, as the small companies rate (SCR) was set to a higher level.
In his final Budget as Chancellor, Mr Brown increased the levy from 19% in 2006-07 to 21%, currently, and then to 22%, planned for 2009-10, the Tories said.
Shadow Economic Secretary Justine Greening, condemned Labour’s approach to Britain’s smallest concerns, saying they had been “secretly” hit with £2.4bn tax bill.
She said that, at a time when 1 in 10 firms are reported to be on the brink of failure, it was as if Gordon Brown had tried to “tax our smallest companies out of existence.”
Observers point out that in the last decade there have been eight tweaks to small business tax, only for the SCR to fall by a net amount of one penny over the period.
Jan 6, 2009
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