The recent rise in small firms’ corporation tax is as big an issue as the abolition of the 10% starting rate of personal income tax, it has been claimed
The Forum of Private Business (FPB) is urging MPs to give corporation tax the same attention as the 10% starting rate, saying it is not only individuals being adversely affected by the new tax regime, but also low-income businesses.
The new rules, which came into effect in this month, means the lower rate of 19% has been raised to 21%, with another rise to 22% planned for April 2009. Conversely, the higher rate, paid by bigger businesses, was cut from 30% to 28%.
According to the FPB, a survey in 2007 suggested almost one in seven small firms would reinvest in their business if the decision to increase corporation tax was reversed.
Half indicated they would have extra funds to invest in skills and training, with over 45% adding they would be more likely to grow their business.
Phil Orford, the FPB’s chief executive, said the new rules target every small business in the UK.
“It is understandable that media coverage has highlighted the burdens for individuals.
“However, the wellbeing of smaller UK businesses is also being seriously undermined, and all MPs should be aware that their business constituents are also being subjected to an unfair taxation policy,” he said.
© Crimson Business Ltd. 2008