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Tax burden on small businesses already too high

Tax burden on small businesses already too high

The new chancellor, George Osborne, is due to deliver his emergency Budget on 22nd June and the FSB has called on him not to increase UK business taxes.

The Federation of Small Businesses and ICM recently conducted a poll that showed that 93% of SMEs and limited company contractors want the government to outline a robust plan to reduce the UK’s financial deficit.

The national chairman of the FSB, John Walker, said that they are pleased to hear that the government plans to spend the coming weeks setting out a clear review of fiscal spending.

He added the Federation’s hope that further taxation burdens will not be placed on SMEs who are still trying to recover from the recession. Instead he would like the government to encourage employment and promote business growth.

George Osborne is expected to cut the rate of corporation tax from 28% to 25% when he speaks to the CBI today (Wednesday). The Conservatives have suggested that capital allowances need to be reformed in order to finance this cut. They believe the current system is too complex and derives little benefit.

The primary allowances are for industrial buildings, plant and machinery and R & D. But there are other allowances available for capital expenditure on agricultural buildings, flat conversions, mining and ships. Additional allowances are available for work on business properties that are situated in disadvantaged areas and those that have been empty for over one year.

One move that Osborne might include in his Budget, which would hit investors and contractors, is to increase capital gains duty. Although this was not part of the Tory manifesto, it was included in the one produced by the Lib Dems. Some IT contractor accountants believe that Capital Gains Tax on non-business related assets might rise from 18% to 40 or even 50%.

The Liberal Democrats would also like to see the tax levied on all investment income profits over £2,000. The current threshold is £10,100. This would lead to about one million people needing to pay Capital Gains Tax every year. Currently only around 250,000 are liable for the tax.

Image: dot the i by shioshvili

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