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SMEs welcome Budget action on employment allowance and fuel duty but caution remains

The Budget contained several announcements that will be well received by the industry’s SMEs, despite the chancellor being accused of a lack of detail in his speech.

The new employment allowance, available from April 2014, will take the first £2,000 off the employer National Insurance bill of every company. “It’s a tax off jobs,” Mr Osborne said.

It will mean 450,000 SMEs in the country will pay no jobs tax at all, with 98 per cent of the benefit of this new allowance going directly to SMEs.

“They can hire someone on £22,000 or four people on the minimum wage and pay no jobs tax at all,” he said.

The chancellor also announced that the government is cancelling the rise in fuel duty planned for September. “Petrol will now be 13p per litre cheaper than if we had not acted over these past two years to freeze fuel duty,” Mr Osborne said.

This went down well with SMEs listening to the Budget. “Scrapping the planned fuel duty rise is welcome and at least prevents this cost increasing,” said Sporn Construction director Robin Sporn on the Construction News Budget blog.

Mr Osborne also announced a cut in corporation tax in April 2015 to 20 per cent. “The lowest business tax of any major economy in the world,” the chancellor said. “That’s a tax cut for jobs and growth.”

Initial reactions to the announcements from SMEs were mixed. “Positive news in the Budget relating to fuel duty, infrastructure spending and housebuilding,” said D Drill managing director Julie White – also on the CN blog.

“However, it is important that infrastructure spending filters through as quickly as possible. Companies like mine want to see action not words and want the money diverted to shovel-ready projects that can kick-start the economy.”

Mr Sporn added: “£2,000 employment allowance is good for SMEs but still not a preferable alternative to a growth stimulus and will do nothing to alleviate a depressed construction SME sector. Little detail on infrastructure and housing, is this more rhetoric?”

Other announcements affecting small and medium-sized businesses included the rise in personal allowance to £10,000 from 2014, the abolition of stamp duty on shares traded on growth markets and a new housing initiative in the Help to Buy scheme.

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