Budget 2012: Small companies get a helping hand
Chancellor George Osborne has simplified the tax system for small firms with turnover of up to £77,000.
The Chancellor said it is time to put a stop to the smallest of UK businesses having to waste time and money on getting to grips with the complicated process that was designed for large corporations.
The move will make filling in tax returns dramatically simpler for up to three million companies, according to Osborne.
In a further bid to boost small businesses, the Chancellor announced the creation of a £20 billion National Loan Guarantee Scheme that will encourage banks to lend to them.
Companies earning less than £50 million will be allowed to apply for the first £5 billion of loans from banks including Barclays, Lloyds, Royal Bank of Scotland, Santander and Aldermore.
The businesses that take out a loan will get a discount of one percentage point compared to the interest rate they would otherwise have received from the lender.
Osborne also vowed to expand the Enterprise Finance Guarantee (EFG), which helps small to medium-sized enterprises get access to bank lending they are normally deemed too risky to be eligible for. To do this, the government provides the lender with a guarantee for which the borrower pays a premium.
The scheme was originally set to run until 2014-15, facilitating up to £1.5 million worth of lending to small firms over a three-year period.
It will be interesting to see how the new schemes will work, considering Project Merlin – announced last year – failed to achieve its £76 billion target.