Small businesses raise 10p tax concerns

News Article - 09 June 2009
Category: Business

The decision by the government to scrap the 10p rate of income tax for low earners could have knock-on effects for small businesses, experts warn.

According to the Forum of Private Business (FPB), small and medium-sized enterprises (SMEs) may be forced to put prices up as a result of the move, potentially leading to a rise in unemployment.

Phil Orford, FPB chief executive, stated: "This is not even a stealth tax; it is a blatant attempt to retain revenues generated by the removal of the 10p personal taxation rate by forcing businesses to bear the financial burden through increases in the minimum wage. We cannot quite believe that it is being put forward as a serious solution."

Ministers have insisted that new policies will be introduced to compensate those losing out financially because of the decision to axe the 10p tax rate.

The FPB recently hit out a decision by ministers to exclude smaller firms from a new 'tax forum', intended to address problems inherent in the UK's tax system.

Corporation tax for small businesses has risen from 19 per cent to 21 per cent over the last 12 months and is due to rise to 22 per cent in April 2009.

Small business concerned about complying with their income tax and other responsibilities can invest in payroll and accounts software to manage their finances more effectively.

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