Chancellor Alistair Darling has pledged to throw ailing small businesses a lifeline.
On delivering the last budget before the general election, Darling outlined a number of favourable support measures and tax changes designed to relieve the burden on UK SMEs.
Business rates will be cut for one year from October, with the Chancellor claiming this will mean a tax reduction for half a million small businesses. Up to 345,000 of this half-million group will pay no business rates at all for the 12-month period.
Additionally, those ready to sell their business will be buoyed by the news that capital gains tax (CGT) will not be changed from its 18% rate. Darling is also to extend entrepreneurs' relief for CGT, which currently taxes the first £1m of lifetime gains at a lower rate of 10%, to the first £2m.
Darling deigned to increase by 15% the proportion of central government contracts that go to SMEs
Elsewhere, RBS and Lloyds – the state-owned banks - have agreed to provide a total of £94bn in new business loans over the next year, of which "nearly half" will go to small and medium-sized enterprises. Over the course of the last 12 months, RBS and Lloyds lent only £38bn to new business start-ups.
Finally, Darling deigned to increase by 15% the proportion of central government contracts that go to SMEs.
Said Darling: “This could mean new business worth an extra £3bn from central government alone, and up to £15 billion across the wider public sector.
