Size matters

The only things you can be certain about are taxes and death, goes the old, rather dismal, adage. Small business owners would agree, with the tax burden being regularly cited among start-ups as one of the keep-you-awake-at-night inevitabilities.

But wait! Is there nothing big business can’t do (or get away with)? Seemingly not, since a third of our larger cousins (the UK’s 700 largest companies) pay – wait for it- no tax. That’s right - according to the National Audit Office, 220 of these business giants, including J. Sainsbury, didn’t pay any corporation tax in the 2005-6 financial year. It appears that the bigger your business is, the more creative the strategies used to avoid large tax bills become, meaning, inevitably, that the contribution made by smaller firms is enormous.

This is set to increase as well, as a result of Gordon Brown’s plan to raise the rate of corporation tax paid by small businesses from 19% to 22% in the next three years. In the same Budget that this was announced, you’ll remember fondly, big businesses were generously given the gift of a 2% cut in their corporation tax rates.  What is 2% of nothing Gordon?