UK - Mixed response to pre-budget report

The acceptance of the recommendations of the Glover Committee Report, which was established in the 2008 budget and was led by Amadeus chief executive Anne Glover, was particularly welcomed across the industry. The report, published alongside the pre-budget report, provided advice on how the Government could help small- and madium-sized businesses win a greater share of public procurement. Initatives already announced will see the Government announce all contracts worth more than £20,000 on a single free online portal, and bureaucracy and opaqueness in the selection process reduced.

There were also several other modest measures designed to help SMEs. These included an increase in the time businesses are allowed to carry back losses from one year to three, and a delay in the proposed 1% increase in the small business corporation tax rate, due to come into effect on April 2009, until April 2010.

However, calls to revise current legislation so that venture capital- and private equity-backed businesses are no longer excluded from small company tax exemptions went unheeded.

Of greater concern, though, was the proposed increase in the top tax rate to 45% in April 2011, which was combined with a 0.5% increase in the rate of National Insurance. This, the BVCA argues, will equate to an overall tax rate of 60% on high earners and could drive international investors out of the UK and into rival jurisdictions such as Switzerland, Ireland and the Middle East. The move was designed to pay for the 2.5% decrease in VAT, which was brought down from 17.5% to 15% in an attempt to increase consumer spending.

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