Small business minister insists most will be better off
Posted 30 March 2007 at 10:48AM by Simon Dickson in Investment and finance
The government's small business minister has rejected criticism of the 'fiscally neutral' changes in Gordon Brown's budget, and urged small businesses to invest more of their profits to reduce their tax bill.
Speaking in an adjournment debate in Parliament's Westminster Hall, DTI minister Margaret Hodge told MPs that sole traders - who make up 3.4 million of the UK's 4.3 million small and medium-sized enterprises - and the self-employed would be better off.
'An SME must increase its investment only by £2,300 in 2009-10 to reduce its tax liability by £500 under the new regime,' she said, thus offsetting the tax increase through investment. 'Ninety per cent of tax-paying companies would pay less tax,' she continued, 'if they invested less than a quarter of their profits back into the business, which is what we want them to do.'
Tory business and enterprise spokesman Mark Prisk had earlier claimed that the annual investment allowance would be 'of no use to millions of small firms'. He also attacked 'the crude way in which this Government seek to attack the self-employed damages legitimate enterprises, especially in fields such as IT, health care and professional services.'
Tags: budget, corporation tax, investment
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