smallbusiness.co.uk: Helping your business think big

New measures to boost enterprise and tackle the productivity gap between Britain and its major competitors were announced today by Chancellor Gordon Brown, the Trade and Industry Secretary Patricia Hewitt, and the Education and Skills Secretary Estelle Morris.

The trio of ministers launched a preliminary report - entitled "Productivity in the UK: Enterprise and the Productivity Challenge" - which says that the new Government will put enterprise and productivity first in the next Parliament . Speaking at the launch of the document, Gordon Brown claimed that he wanted to "bring forward radical measures to tackle our productivity gap and create in Britain a true enterprise culture where the chance to start and succeed in business is genuinely open to all."

The report is wide ranging, but some of the most important issues directly relate to SMEs - specifically the reduction in the corporation tax rate; help with VAT compliance; and a review of payroll services for new and small businesses.

The next Budget in 2002 will see the extension of the 10% corporation tax rate to reduce small companies' tax bills. A 10% rate was initially introduced to the smallest companies in the last Parliament, but under the new proposals, more SMEs will qualify for the new rate.

Proposals for a new flat-rate VAT scheme for companies with a turnover of less than Ł100,000, have been put forward. This should, if implemented, lead to lower compliance costs and less tax to pay for more than 300,000 businesses. On top of this, small companies that are late in paying VAT will, in the first instance, be sent a letter offering advice and support on solving the situation. This is instead of the current policy which is to automatically levy a fine.

A review into the provision of payroll services for small businesses is also proposed. This will hope to discover how payroll procedures can be executed more efficiently through better support initiatives and the use of cutting edge technology. Speaking on this issue, Anthony Goldstone, President of the British Chambers of Commerce said that "any review of payroll services for firms must seek to cut the costs and reduce the burden, particularly on smaller firms."

SMEs that wish to access a copy of the full, associated document to discover more about how it affects their businesses should visit H.M. Treasury's website at www.hmtreasury.gov.uk/press/2001/p67_01.html .

With thanks to Lloyds TSB Success4Business. For more news and information visit www.success4business.com .

(18/6/01)

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