Almost 1000 small businesses collapse everyday in the UK. Given the importance SME´s have to the economy urgent action is required. Given the reluctance of the banks to hand out loans to small business owners experts are calling for HMRC to offers tax incentives that SME´s could benefit from.
Although HMRC are on the rampage to clamp down on tax evaders there have been several strategies that are designed to assist SME´s manage their tax accounts. In April, the coalition government introduced a scheme that gives SME´s a tax break in National Insurance payments for employees.
Will job tax really help small businesses?
The so-called “Jobs Tax,” offer tax breaks to employees that earn £22,400 or less – or four employees on a minimum wage. It is estimated that it will help small business owners reduce the outlay of their national insurance contributions by £2,000 and is designed to encourage business owners to employ additional staff.
However, trials in the south-east of England did not yield positive results, but the Government has decided to go-ahead with the scheme anyway. The danger is that small businesses owners can be encouraged into taking on a member of staff only to find they end up paying more in wages rather than benefitting from the tax break.
Tax cuts need more clarity
Doubters who benefit the jobs tax scheme have called for HMRC to show more clarity about job tax and to also make benefits more dynamic. The concern is the offer of a tax break will stifle small businesses rather than encourage significant investment that will stimulate the economy. Small business owners should seriously question whether taking on staff will fuel productivity and profit.
Talking of encouraging businesses to spend, the surprise inclusion of the budget that came into effect at the turn of the year was a tenfold increase on the Annual Investment Allowance (AIA). This is great news for businesses that intend to invest more than £25,000 and anything up to £250,000 over the next two years, but the reality is the increase is only benefiting large businesses.
Likewise, the third cut in corporation tax plays into the hands of large companies at the expense of small business. In the annual Spring budget, Chancellor of the Exchequer George Osborne announced “Britain is open for business,” after cutting Corporation tax to 20% in order to attract overseas companies to the UK.
As a result, Britain will be saddled with international businesses that transfer money to sister companies in overseas locations whereby the economy misses out on taxes and small businesses don´t get the customers they need to survive.
It is clear the Treasury nor HMRC is helping SME´s to survive, and when the government won´t help you need a team of qualified chartered accountants that will. There are a number of tax breaks you are legally entitled to that will benefit your small business and help you to grow so to find out how we can help you call Taxaccolega, a low fixed fee Accountant in London, on 08000 235 234 or email firstname.lastname@example.org