What George Osborne says is often quite different from what he actually does. Speaking at the Conservative Party Conference in Washington last month, the Chancellor said he intends to “share the rewards” of growth with the British Public. He was of course referring to the UK´s seemingly improving economy.
On the surface the financial outlook in the UK is looking promising, although Osborne admits there is still a long way to go before recovery is complete. One of the reasons Osborne is confident Britain can escape the clutches of debt is by lowering the amount of Corporation Tax liabilities payable from large companies.
For 2013/14 corporation tax was reduced from 28% to 23% and will be cut by a further one percent over the next two years. That means that multinational companies will be paying the same rate of taxes as a small business owner turning over profit of less than £300,000. The idea behind the cuts is to make the UK an attractive move for international businesses.
Low tax UK
How Osborne plans to share the rewards of growth with the British public remains to be seen because so far he is just offering handouts to foreigners. Other than the reduced tax liabilities for married couples the chancellor´s policies have hindered small business owners rather than helping them.
The Tory government has been criticized for not doing enough to prevent overseas companies using offshore bank accounts to avoid paying taxes in the UK. Multi-million pound companies including Apple, Google and Starbucks dodge several million pounds in taxes. Despite talk of a crackdown in the summer, the Tory government has done nothing to prevent a loophole that costs the country £500m in unpaid taxes.
It´s fair to say that some small business owners are aggrieved of the way multi-million pound firms are handed financial benefits whilst small companies are being crippled. Speaking to business leaders at a conference in the East of England recently, British Prime Minister said, “Small business and entrepreneurs are the lifeblood of our economy and this government is firmly on their side.” So what has the Tory government done for small business?
In April, small businesses were offered a £2,000 tax break on National Insurance contributions if they hired employees and paid them £22,000 or less. The idea behind the scheme is to encourage small businesses to employ staff and open job opportunities. In reality, it means small businesses are spending more on staff wages than they actually save in taxes. Is that what Cameron means by being “firmly” on the side of small businesses?
The PM however, has shown some leaning towards small businesses owners and by threatening large companies with fines if they fail to pay small businesses their dues for goods and services on time. It´s a token gesture, but every little helps!
Despite the governments lack of support for small businesses, “the lifeblood of the British economy” there are several ways you can reduce your tax liabilities. For more information contact Taxaccolega, a London Chartered Accountant, on 08000 235 234 or email firstname.lastname@example.org.