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December 06, 2013

Autumn Statement worth "thousands" to SMEs

Autumn Statement worth "thousands" to SMEsSmall firms will be significantly better off thanks to measures introduced in the 2013 Autumn Statement, according to the Forum of Private Business (FPB).

It's just one of the largely positive reactions from business groups to George Osborne's statement.

Alexander Jackman, FPB head of policy, said: "With fuel duty frozen, £1,000 rebate on business rates and a subsidy on employing young people, there are measures worth thousands to small businesses. Within a time of constrained budgets, it's good to see the chancellor has listened to the concerns of small businesses around rising costs."

In particular, changes to business rates have been widely welcomed – after considerable lobbying by business groups – although the measures don't go far enough for many.

John Allan, national chairman of the Federation of Small Businesses (FSB), said: "Action on business rates was the top priority for our members and the chancellor has addressed some of their concerns. What remains outstanding is a fundamental reform of business rates, which we will continue to press for."

John Longworth, British Chambers of Commerce (BCC) director general, said: "The measures announced to curb business rate increases are positive, but not strong enough to boost companies' cash flow and investment. The chancellor should have been bolder, freezing business rates entirely until this pernicious tax can be properly reformed."

Most commentators are still hoping that more radical reform of the business rates system is on the cards in the future. Vince McLoughlin, partner at business & tax advisory firm Russell New, said: "Freezing business rates has eased the burden on businesses and given time for the tax to be reformed over the next couple of years."

And Simon Tivey of accountancy firm PwC said: "Radical change in the structures underpinning business rates is long overdue. The chancellor has hinted at root and branch reform to coincide with the 2017 revaluation."

But Tivey questioned how one aspect of the rates cut might work. "The new 50% 'reoccupation' relief for small businesses on the high street could reduce the number of vacant shops but has the potential to be unfair to existing businesses. Unless it's managed properly, unintended consequences are inevitable, with small businesses just moving shops to take advantage of the relief, creating a merry go round of rate relief relocations."

Another measure that has been welcomed is the National Insurance tax cut for under-21s. John Allan said: "This surprise tax cut is recognition that extra efforts are needed to get young people into employment. We look forward to seeing further details to understand how small and micro businesses might benefit, including how this links with the Employment Allowance which comes into force next April."

John Cridland, CBI director general, added: "Abolishing a jobs tax on employing young people under 21 will make a real difference and help tackle the scourge of youth unemployment."

>> Read our comprehensive round-up of the main announcements in the 2013 Autumn Statement on Start Up Donut.

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