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News - 5 March 2013

Forum of Private Business tells Osborne scrap rates increase

Research by the Forum for Private Business has identified rates as the least favourite of all business taxes, with 94% of firms believing they have spiralled too high. The Forum blames the tax’s link with inflation – which last year saw a huge 5.6% hike on bills – and has asked the Chancellor to consider capping any subsequent rises for the following two years at 2%.

With traditional lending remaining weak, the employer support organisation’s annual submission to Number 11 has also called for government to further incentivise private lending through alternate sources of finance, and also to look at piloting neutral, shared bank branches.

The Forum’s Head of Policy, Alex Jackman, said: “Reducing the cost of doing business is a key way to improve cash flow for small businesses. Business rates are one of the major costs faced by British businesses.”

Lavinia Newman, founder of ABDS comments:
“Business rate increases are linked to the RPI level which has been running at an extremely high rate and as a consequence businesses were faced with a 4.6% increase in 2011, a 5.6% increase in 2012 – the highest for 20 years – and now a proposed 2.6% increase this April.”

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“By scrapping business rate rises this April and capping them at 2% over the following 2 years, the government can help with both cash flow and certainty for financial planning. It would also encourage businesses to consider local council proposals on supplementary business rates with more open minds.”

The Forum also asks the government to place a greater focus on improving credit to those firms who need it most, by improving traditional lending routes for SMEs, as well as encouraging new forms of lending.

It believes government must look again at incentivising private lending, and points to its own member research which showed that a growing number of firms are of the opinion they will have less leeway in coping with rising business costs this year – 41% – through subdued lending. For these reasons the Forum says the government should reconsider its opposition to tax breaks for lending through alternative platforms to help deliver quicker and better access to finance for small business.

Alex Jackman continues:
“The Chancellor has some tough decisions to make in his next Budget. But we think he must seriously look at new and creative ways to get lending moving again, if not from the banks then from new sources.”

If you need any help and advice on Management Accounts, Budgets and Cash Flow Forecasts, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar NOW to discuss how ABDS can help in all your financial planning.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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