In this era of 24 hour media it’s interesting to see stories develop online, but I still enjoy glancing over the newsstands the morning after a big story to see how the traditional press have summed it all up.
The morning after the Pre-Budget Report The Sun claimed ‘Darling raised a storm of protest yesterday as he hammered millions of hard-working Brits’ referring to the new tax increases and public spending cuts, The Financial Times declared ‘Chancellor accused of sleight of hand’ and The Times’ broke with ‘Pre-Budget Report: Darling unveils stealth tax and public sector pay cap.’
But aside from the headlines in the media what does the Pre Budget Report mean to businesses in the UK?
The key for all businesses, regardless of size, was that the Chancellor set out plans that would do as little as possible to hinder firms trying to recover from the recession. It is business growth that will ultimately pull the country out of recession.
Encouragingly there were a number of measures unveiled to specifically help small businesses. The Chancellor proposed to extend the availability of loans to small firms and defer the increase in corporate tax, which is welcome news to many small businesses in the UK. Many businesses will be happy to see that Mr Darling will be indefinitely extending the “time to pay scheme”, which helps businesses to improve cash flow by helping small companies spread tax payments over a longer period. This comes just in time as improving cash flow has been identified by our customers as the key challenge in 2010.
But with the positives there were also a few announcements which could harm a number of businesses, one being the increase in National Insurance contributions – which are set to rise by 0.5 per cent by 2011.
Update: 14.12 - Our payroll expert Gary Ging has just pointed out that this 0.5% increase comes on top of the 0.5% increase announced in the Budget earlier this year. All of which means NICs will increase in April 2011 by 1%
The full effect of the Pre Budget Report will not be felt in businesses for a number of months. But rest assured, here at Sage we are busy at work incorporating these changes into our software and services and will be on hand as always for customer support.