Chancellor George Osborne will announce four measures, taking in business rate relief, enterprise investment, small firm loans and capital gains tax, that one tax expert believes the government would not consider unless it believed they would truly boost growth.
It is predicted the one year business rates holiday for small firms, due to end in October 2012, will be extended by a further six months, costing the Treasury around £210m.
Osborne believes the move will help 500,000 businesses across the UK, with 330,000 firms paying no business rates in 2012/13.
In addition, the government will announce a “credit easing” scheme to release up to £40bn of loans to small firms, with the Treasury underwriting banks borrowing, so they can offer cheaper loans to smaller firms with a turnover of less than £50m.
Loans of £20bn will be involved, but Osborne has suggested this could be doubled.
Enterprise investment will also be given a boost from April next year, with the government offering 50% income tax relief to “business angels” on the first £100,000 they invest in a new company. New firms will be eligible for up to £150,000 investment in total.
The scheme, expected to cost £50m over three years, will also offer investors a capital gains tax holiday for the first year to encourage those sitting on profits from other investments to put the cash towards new start ups.
George Bull, senior tax partner at Baker Tilly, said: “These tax measures ought to help. We don’t have excess tax revenues to give away, so the Treasury really has to be convinced that they will be helpful.
“The business rate holiday is a thoroughly good idea that those that qualify will be very grateful for. One must not underestimate the huge pressures businesses, particularly small firms, are under.”
Bull added: “I have a great belief in angel equity. It is at a relatively small scale that banks don’t have the processes to deal with without killing firms with paper work. Private investment could be very important for all sorts of business and it will be a real feature of the landscape for the next five years.”
However, Bull warned that returning confidence is vital to recovery: “We are undoubtedly in the worst crisis we’ve ever seen, but politicians need to stop the perpetual hand ringing and make a concerted effort to boost confidence in the country.
“Businesses with confident management will recover well from a crisis and I believe it’s the same for the country.”
Osborne will deliver his autumn statement from 12.30pm today. Watch it live here.
