Reactions to the Budget
MD, Quicksilva (software supplier)
It’s left me feeling quite ambivalent. The target of giving 30 per cent of government business to small and medium-sized enterprises (SMEs) doesn’t seem to have been thought through. If I were working in procurement (as I used to before I started my own business) I’d be thinking: “What are the easiest areas to get SMEs into?” It’ll probably be things like cleaning and park maintenance, while the complex stuff will go to the big boys as usual. The £12.5 million fund to encourage women to go into business makes me cringe. I’d rather see it going to encourage young people to start businesses.
Tax adviser, Grant Thornton and Gateway2investment
The big story is still the increase in CGT. The tax-free threshold of £1 million is just not hitting the mark: it adds up to £80,000 over a lifetime and to call it entrepreneurs’ relief is just rubbing salt in the wound. There are a few positive measures, such as the increased limit for the enterprise investment scheme (EIS) – but that has to be judged against the attack on the scheme over the past few years. Another negative is the project cap on R&D tax credits of e7.5 million, which is a sting in the tail for many technology ventures.
MD, Warren Partners (recruiter)
There are a number of small concessions, like the expansion of the Small Firms Loan Guarantee scheme and the fund for female entrepreneurs. The UK has to get more people into entrepreneurship: we have far fewer [entrepreneurs] than in the US, and the proportion of women in business is much smaller. As for [Darling’s promise of cutting back on red tape, I have never seen a government manage this. The cost of executing public sector work is prohibitive and growing businesses do not have the resources to deal with layers upon layers of legislation.
Tax partner, Robert James Partnership
This Budget does little to address the concerns of growing businesses, but there is some good news. One thing that wasn’t announced in the speech, perhaps because they are a bit embarrassed about it, is the delayed implementation of new legislation on income shifting. Husband-and-wife businesses have a year’s grace before a possible crackdown, but there is a chance this idea might be shelved for good. Another key point is the reduction in the top rate of corporation tax from 30 to 28 per cent. What Darling didn’t highlight is the increase for businesses with profits of under £300,000, from 21p to 22p in the pound.
MD, Bluhalo (digital agency)
In this market, people are delaying decisions because of a general lack of confidence.
My hope was that the Budget would stimulate business confidence – but far from it. For entrepreneurs like me, who set up their businesses years ago expecting to pay ten per cent CGT, it’s a kick in the teeth. As for the £12.5 million for female entrepreneurs, it’s almost insulting. They should be targeting people at an early age, going into schools. All in all, there is nothing inspiring at all here, and it doesn’t surprise me that other parties have stormed ahead in the opinion polls.
Head of mid-sector issues, ICAEW
The CGT changes will affect businesses in a number of ways, not just the relatively few entrepreneurs who are thinking of selling, but those with normal capital gains too. Certain industries will be particularly affected: private equity, of course, but also life assurance firms, which will pay more tax on the gains they make on their investors’ behalf. In contrast to last November [when the pre-Budget report was released], the economic environment is considerably more hostile now, and building confidence
and encouraging investment should be a priority.