Huffpost UK Politics uk
The Blog

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Phil McCabe Headshot

The Budget: A Real Opportunity to Remove the Growth Barriers for Small Firms

Posted: Updated:

There's absolutely no doubt that history will remember today's Budget as something of a crossroads for the country in an economic sense.

For this will essentially be a sink or swim moment for the UK. If Mr Osborne gets it right it'll help power the country in to recovery mode. But get it wrong and the real danger will be continued poor growth, the UK bouncing along the bottom while competing economies forge further ahead.

So which will it be?

While we have already outlined our main 'wish list' ahead of the big announcement, this blog fleshes out in more detail our hopes for a more simple and proportionate tax system. We think it should be the cornerstone for UK growth, and will be absolutely crucial for the economy to move forward and prosper.

In fact, research carried out among our members on our tax and budget panel also suggests there is strong support from small business leaders for a major re-think of taxation. Half (44%) of respondents called for wholesale changes to the structure of the UK's tax system, while a quarter (24%) want certain tax breaks removed to simplify the system.

But perhaps more worryingly is that 53% of respondents believe HMRC is actually doing a poor job in supporting them, with 33% critical over its lack of definitive answers to tax questions and 32% the lack of clarity in its communications.

Not exactly an overarching endorsement of the country's tax office which would shoulder the responsibility for implementing change to the tax system.

Looking ahead, business owners have prioritised reducing fuel taxes to ease costs, and a VAT reduction for labour-intensive industries such as tourism. A VAT cut for a short term period in the housing sector In order to stimulate the construction industry and help boost the industry and create jobs would also encourage growth. The same for home improvements.

We submit though that real reform of the tax system should begin by the doing away with the existing £5,000 National Insurance holiday for the first 10 employees recruited by start-ups to apply to the first two new staff taken on by all firms. Handing private lenders tax breaks to boost available finance and drastic improvements in HM Revenue & Custom's (HMRC's) systems goes without saying.

The Budget is a real opportunity to remove the growth barriers for small firms created by the complexity of the tax system. It is clearly one that should not be missed.

In particular, our members want to see a more level playing field on tax, and the UK's tax system to be conducive to business growth and success rather than a hurdle that is a struggle to overcome. Scrapping the 50% income tax rate, balanced by raising the minimum earnings threshold for paying tax to £10,000, seems sensible, especially given the mounting evidence that it is a barrier to entrepreneurship and inward investment, outstripping the government's income from it.

It is time to see genuine tax incentives to boost employment and investment in small businesses - which after all is the sector which the government has said repeatedly will be the key area able to deliver the much needed growth.

This includes more encouragement for private lenders to compete with banks and stimulate funding for all firms.

Around the Web

UK budget: how much to help the rich?

UK inflation dip provides relief ahead of budget

UK Budget Won't Boost Growth, Says RBC

Budget 2012: UK borrowing expected to fall below £100bn and OBR growth ...

Sterling edges up vs euro after UK CPI; focus on budget

UK launches small firm loan scheme, critics want more

Budget must allow UK to express its enterprising side

Presented By Chivas Regal Scotch Whisky