Budget 2012 may mean business, but don’t expect changes

Businesses are telling Chancellor George Osborne that the banks are not doing enough to help them and he needs to switch on the money tap to supply a regular flow of cash for investment in Budget 2012.

Osborne wants to help and realises that future prosperity relies on nurturing small business, who generate a significant proportion of GDP and employ millions.

If small businesses fail, the economy fails.

Osborne has taken three key steps to make funding available for business –

  • The seed enterprise investment scheme (SEIS) will start on April 6, 2012 as a Dragons’ Den style funding initiative for start-ups.

Angel investors can sink up to £100,000 in to barebones start-ups in the next tax year, in return for an income tax write-down of £50,000 plus a 100% relief on rolled over capital gains.

Some taxpayers could scoop up to a 78% tax reduction by investing in SEIS.

  • The National Loan Guarantee Scheme will aid businesses with a turnover of less than £50 million with up to £20 billion of guaranteed loan funding through banks underwritten by the government over the next two years.

If the scheme clears European Union legal hurdles, he hopes to have ink on the cheques dry by Budget Day 2012 (March 21).

Interest rates are expected to run at least 1% lower than standard bank rates.

  • The Business Finance Partnership will finance medium-sized businesses with funds of up to £1 billion.

The chancellor has made the scope of any changes in Budget 2012 absolutely clear – cuts or increased rates will need to pay for cuts or changes elsewhere.

That leaves little room for change for business.

The coalition announced a sliding scale reduction in corporation tax last year and also promised no changes in capital gains tax during the life of this parliament.