Whilst the cut in Corporation Tax from 30 per cent to 28 per cent is welcome and has grabbed the headlines the detail shows that small businesses are facing a substantial rise in the level of tax they pay.Closer analysis of the Budget shows that the rise in the Small Companies’ Rate from 19 to 22 per cent in 2009 will bring in an extra £820 million for the Treasury.

The BCC welcomes the Annual Investment Allowance increase to £50,000 and the increase in the SME R&D tax credits but is concerned that this will be offset by the increased tax on profits. 

David Frost, Director General of the British Chambers of Commerce, said:

“This budget could be damaging for small and medium sized business in the long term

“Whilst the Chancellor has offered incentives for investment he has also increased the amount of tax that those covered by the Small Companies Rate have to pay by over £800 million.  This is a substantial rise and will hit those looking to grow their business.

“As a Chancellor who champions enterprise and acknowledges the importance of small business to the UK economy, many of our members will feel let down by today’s Budget.”