Harris Lipman News

Harris Lipman chartered accountants cautiously optimistic about Autumn Statement

29/11/2011

London-based chartered accountants Harris Lipman is urging businesses to carefully study the Chancellor’s Autumn Statement to see if they can benefit from any of his announcements.

Among the measures declared by George Osborne that could have major repercussions for small and medium sized businesses include credit easing through a National Loan Guarantee Scheme, the government will make available £20 billion of guarantees for banking funding over two years. This should allow banks to offer lower cost lending to smaller businesses, subject to state aid approval. 

The government will also make available an initial £1 billion, through a Business Finance Partnership to invest in SME’s and midsized businesses in the UK.  This will initially concentrate on co-investment with the private sector through non banking channels who lend directly to midsized businesses. 

From April 2012, anyone investing up to £100,000 in a new start-up business will be eligible for income tax relief of 50% under a new Seed Enterprise Investment Scheme (SEIS). In addition, there will be a capital gains tax exemption on gains realised on the disposal of an asset in the tax year 2012/13 and invested through SEIS in the same year.

Also the government is to simplify the EIS rule on connected persons and on the definition of shares that qualify for relief.  There is to be a new test to exclude companies set up for the purposes of accessing the relief, exclude the purchase of shares in another company and to exclude investment in Feed in Tariff businesses.

With regard to VCT’s the £1 million investment limit is to be removed.

It was also announced today that the annual exempt amount for Capital Gains Tax will remain at £10,600 for 2012/13.

As expected, the Government has extended the current small business rate relief holiday for a further six months from 1 October 2012. 

The Government also announced that it will give businesses the opportunity to defer 60% of the increase in their 2012/13 business rate bills, to be repaid equally across the following two years.

In an R&D u-turn, Mr Osborne announced an “above the line” tax credit in 2013 to encourage research and development activity by larger companies. This will be consulted on for the 2012 budget to ensure that SME R&D tax credits are not reduced as a result of this change.

On 6 December, the Treasury will publish the draft clauses for the 2012 Finance Bill for further consultation and we will have to wait until then to see what further issues the Government will address

Martina Fitzgerald, Tax partner at Harris Lipman, said: “George Osborne has announced a raft of proposals, which, on the face of it, will benefit small and medium sized business, many of whom are our clients.

“We particularly welcome the measures announced regarding the National Loan Guarantee Scheme (NLGS), the new SEIS and rate relief.

“SMEs often find it difficult to access credit. Hopefully the NLGS will open up new credit lines to help struggling businesses stay afloat.

“However because of the current uncertain economic times, it is difficult to say whether, in the long run, these incentives will really get the country back up and running.

“Businesses should carefully study the small print to see if how they can benefit from any of these announcements.

“We are only too happy to help businesses make sense of these policies.”

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