Small businesses get help in pre-budget report

Darling also said that he will extend indefinitely the “time to pay scheme”, which allows small companies to spread tax payments over a longer period – a measure that furnishes credit-starved firms with additional liquidity. Since it was introduced a year ago, more than 150,000 businesses have deferred £4bn of tax.

The Engineering Employers Federation welcomed news that the chancellor is to postpone the small companies’ rate of corporation tax until April 2011.

Commenting, EEF director of policy, Steve Radley said: “We have been through an unprecedented period of instability from which we have yet to emerge. With the road to recovery likely to be long and uncertain, the need for a stable business environment will be just as important during the upturn as it was in the recession.”

Small business organisations were also pleased that the chancellor is increasing tax relief on empty properties. Firms that own empty buildings with a rateable value below £18,000 will not be liable to business tax, a move that will help 850,000 small companies.

A spokesman for the British Chambers of Commerce said measures that increased liquidity or the availability of credit were essential at times like these when many small funds were struggling under the weight of recession. “Credit is the cornerstone of any well-run economy,” he said.

Andrew Jupp, Head of Tax at Tenon Group PLC, said: “Darling said this would be a balanced budget – and it certainly was in terms of aiding small businesses.  But what he gave with one hand he took away with the other.  Cheers over the extension of time to pay scheme and deferral on the rise in corporation tax were quickly replaced with groans following the 0.5% increase in National Insurance Contributions.”

The Federation of Small Businesses welcomed plans to set up a national investment corporation, to be funded via £500m of contributions from banks and other financial institutions and designed to supply capital to the small- and medium-sized business sector.

A spokesman said: “We have been calling for more accessible routes to credit for some time, so a new fund that makes credit available specifically to small firms is a very welcome step. The government must ensure that any new lending initiative must be available to those high technology small firms with innovate ideas that want to grow but need the finance to do so.”

The FSB adds: “These businesses are strategically important for the UK economy. Small businesses are the key to pulling the country onto the road to recovery and new lending proposals could help small firms to develop and grow, as well as employ new staff.”