Joined-up thinking for entrepreneurial companiesMar 24, 2011
Rachel Salter (pictured), tax principal at MacIntyre Hudson’s Milton Keynes office, said: “The overall feel of the Budget is positive and fair. In particular, the changes to Enterprise Investment Scheme, Research & Development tax credits for SMEs and the extension of Entrepreneurs’ Relief to £10 million all sound like joined up thinking for smaller, entrepreneurial companies.
The Plan for Growth, published alongside the budget, offers useful access to finance measures for SMEs.
Rachel said: “We need more detail on how the proposed Business Angel Co-Investment Fund and the £2.5 billion Business Growth Fund will operate but it seems to be a measure to help those SMEs with the best potential for growth.”
However, Entrepreneurs’ Relief could have offered more for businesses throughout the area, she added.
“We are deeply disappointed that there is no extension of the relief to employees. It is rare that an employee owns 5% or more of the shares in a company -the minimum share holding required for qualification – and at the moment holders of Enterprise Management Incentive share options do not qualify.
"Changing both these requirements would have encouraged greater employee share ownership in their employer companies.”
There are also other areas of the Budget which will be of concern to businesses throughout the county. These include the lack of real measures on IR35. Rachel said: “A helpline, ‘better trained’ people to investigate and a focus on ‘higher risk areas’ are meaningless measures.
“While it means that some companies can perhaps breathe more easily, knowing that they probably will not be checked, this does not solve the IR35 problem. It should have been scrapped and a real test to determine whether someone is employed introduced instead.”
When it comes to business owners in Milton Keynes, MacIntyre Hudson is dismayed by what it sees as a missed opportunity on personal allowances.
Rachel said: “The Chancellor confirmed that the 50% rate of income tax is a temporary measure and that he has asked HMRC to review how much revenue it raises.
"There was, however, no mention of the clawback of personal allowances for those earning between £100,000 and £115,000. The result is the anomaly of an effective tax rate of 60% in this income bracket.
“This means that someone earning £100,000-£115,000 pays a higher rate of tax than the super rich.”
“There are many welcomed measures in the budget including that the Time to Pay scheme is continuing and that UKTI will be offering more support to SMEs who want to export. Increasing numbers of our clients are looking to expand their business that way, so we’re delighted to see this.”