By Vijay Thakrar
The Chancellor seems to accept the view that Small and Medium Enterprises (SMEs) are a key driver for helping to generate economic recovery ,as evidenced by announcements such as the following:
- The doubling of capital gains tax (CGT) "entrepreneurial relief" to £2m from 6 April 2010, effectively providing entrepreneurs with a 10% CGT rate on the first £2m of gain when selling their businesses
- The doubling of the Annual Investment Allowance (100% relief) to £100,000 for plant / machinery used in a business from April 2010.
Whilst these are welcome measures, entrepreneurs will still be dismayed by other areas that need urgent attention if we really want to have an SME led recovery. Examples include:
- The significant regulatory burdens on businesses - smaller business simply do not have the resources to cope with ever-increasing regulation such as administering the government's various tax credit schemes.
- The significant Inheritance Tax Liabilities that can arise when entrepreneurs seek to pass on their hard earned (and taxed) wealth to their families -despite the announcement that the thresholds will be frozen for the next four years.
- The significant reduction in recent years of schemes that allow
entrepreneurs to raise equity risk capital, e.g. under the
Enterprise Investment Scheme or Venture Capital Trust Scheme.
So while the news in some areas was welcomed (or not as bad as feared!), there are still a number of areas to work on.
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