Firm News

PRESS RELEASE

March 22 2010

BPU urges Chancellor to encourage Welsh Enterprise

A leading independent Welsh accountancy firm says it is fearful that SME businesses will miss out in the forthcoming Budget.

Mark Aherne, Head of Tax with BPU in Cardiff, is concerned that the needs of smaller businesses will be overlooked due to the ‘political’ nature of this Budget. The Chancellor, he says, may well be at pains to lay the basis for the coming election campaign, rather than addressing the current needs of business.

“We are coming out of recession, albeit slowly, and the next twelve months is critical,” said Mr Aherne.

“SME’s are the backbone of the Welsh economy, and their health is vital to the country.  They need help immediately to benefit from the improving conditions, otherwise markets and jobs will be lost.”

He has urged Mr Darling to ignore the politics of a pre-election budget and apply some measure that could really make a difference to SME’s in Wales.

“There are measures that should be taken by the Chancellor that would give local businesses the support and confidence back they need to go for it in 2010/11.”

His suggestions are:
* The small companies rate of corporation tax is currently 21% but it is proposed that this will rise to 22% from 2011/12. This rise has been proposed in the previous two budgets but commitment that this rise will now be scrapped altogether would be welcome news

*. For businesses investing in plant & machinery for their business, tax relief of 100% is generally given on the first £50,000 of expenditure. This is known as the annual investment allowances (AIA). On expenditure exceeding £50,000, 40% of the cost can be deducted from profits in the year of expenditure. This is due to revert back to 20% from April 2010. An extension of this 40% rate for a further year or an increase in the AIA limit would encourage owner managers to invest further in their businesses.

* National Insurance is due to increase by 1% from April 2011. This is an unwelcome additional cost for employers and may influence hiring decisions at a time when the employment market is still fragile. At the very least a deferral of this increase would be a popular move with employer

* For business owners contemplating a sale, Entrepreneurs Relief taxes the first £1m of gain at a rate of only 10% ( 18% thereafter). An increase of this limit would be a welcome move and may encourage Investments and transactions that would stimulate the welsh economy.

Ends