Small companies fear Budget 2009
More than 80% of smaller businesses fear they will bear the brunt of tax rises on April 22nd, in spite of the PBR shelving ‘income-shifting’ laws and temporarily cutting VAT.
Increasing tax on small outfits is ideal to pay for the measures already set in the chancellor’s November report, which 73% of the firms were disappointed by, an FPB members' poll shows.
Advisers at accountant PKF said that, thanks to falling tax receipts and tight fiscal conditions, the chancellor would indeed be looking for tax-raising targets, in line with the firms’ fears.
Ominously for enterprise, the advisers ruled out that the much-needed revenue would come from personal taxation, mainly due to political rather than economic considerations.
“Although Budget 2009 may prove to be controversial, the controversy is unlikely to spring from changes to personal tax,” PKF explained.
“Alistair Darling will have learnt some hard lessons from the uproar over the abolition of the 10p tax band and is likely to steer away from too much change.”
To show he feels the pains of the hard-up, PKF said the chancellor may even delay the proposed increase in national insurance rates of 0.5 % for self-employed and other workers.
Another gesture to the business community would be the unveiling of a scheme to allow small firms to surrender otherwise unused business losses to HMRC in return for cash.
The most critical announcement for firms, however, is likely to relate to steps relating to bank lending, expected through financing and loan guarantees schemes, to complement the existing support.
But all three possibilities come amid the certainty of an economic slowdown, which, as previous ones have shown, means the taxman is keen to fill the Treasury’s depleted coffers.
“As the chancellor has virtually no room for manoeuvre to fund a fiscal stimulus,” PKF said, “we expect him to announce ever more anti-avoidance moves to try and collect more tax.”
It added that tackling offshore tax structures, havens and accounts are high on government agendas across the G20, making “considerable detail” on such international issues likely.
14th April 2009