Will the 2010 budget be one to secure votes and be good for SMEs? Probably not..

Hi all,

My name is Mark, and I’ve just joined the Business Heroes team to add some additional insight. Worried about tomorrow’s budget? Here’s my two-penneth…

Budget 2010

This Last year’s budget was a mixed bag for SMEs. While a continued delay on corporation tax and increases in capital allowance to 40 per cent may have been helpful, many were left feeling underwhelmed by Alistair Darling’s moves – especially that 50 per cent tax increase, hardly an incentive for Britain’s entrepreneurs!

Cash-flow was certainly one of the main worries of 2009 with many SMEs going to the wall while others suffered from a lack of easy access to finance from banks and financial institutions who, as we know, were having a very public nightmare of their own.

There were also calls among SMEs for a government funded wage bill subsidy for short-time working that fell on deaf ears. Indeed, even the launch of a £750m investment fund to provide support to emerging technologies in green, digital and energy areas, plus the introduction of a top-up supply chain insurance to help companies protect themselves against non-payment won’t have helped soothe the pain for SMEs who have felt little in the way of support.

So what does tomorrow’s budget hold? In truth, probably nothing new. Labour is looking to secure votes for another term in office but must be seen to be making plans to get public finances back in order. Yet at the same time there are still very real fears we may dip back into recession.

One thing we know for sure – and one that all parties agree on – is that public spending must be cut and Labour’s promise to reduce the budget deficit by 50 per cent over the next four years will have a major impact. And although the government has promised to spend more of its money with SMEs, these are likely to feel the pinch from a swathe of public spending cuts across the board.

Of course Taxes will go up and this has been widely expected with many businesses already preparing themselves for a 1 per cent rise in employers’ National Insurance Contributions from April. That said, VAT and corporation tax are widely tipped to remain the same while Capital Gains Tax could well rise. Again, a mixed bag.

Then there’s the good news that HMRC will be upping the ante when it comes to collection as new powers are bestowed upon it. These may include increased anti-avoidance measures and a greater allowance on setting interest rates charged on outstanding tax payments, while at the same time tightening rules on rebates.

The government will also be looking to reduce unemployment levels through a number of schemes and this is certainly one area in which small businesses will probably see budget benefits from through added hands on deck.

Whatever happens, small businesses should proceed with caution as any positives seen may be over-optimistic forecasts on Labour’s part if previous attempts are anything to go by. Then there’s that huge deficit that the treasury simply has to reduce which is not going to go away in a hurry.

I’m afraid, as far as the budget’s concerned at least; it’s more of the same for SMEs in 2010. Bah.

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One Response

  1. […] Will the 2010 budget be one to secure votes and be good for SMEs? Probably not.. […]

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