FSB Urges Extension Of Small Business Tax Breaks

by Robert Lee, Tax-News.com, London

22 November 2002

The Federation of Small Businesses (FSB) on Wednesday called for UK Chancellor, Gordon Brown to extend the tax benefits currently enjoyed by small businesses to the self-employed, sole traders, and partnerships.

In its submission to Mr Brown prior to his forthcoming Pre-Budget Report, the FSB expressed strong concerns over 'the creation of a tax system that effectively discriminates against one type of business structure over another. We often hear government statements about helping small companies but this approach overlooks a large and important part of the small business sector.'

Chairman of the FSB's Financial Affairs Committee and author of the submission, Neil Hamper warned that preferential tax treatment for small companies has forced many sole traders and self-employed taxpayers to incorporate, thus greatly increasing their compliance burden.

'The Chancellor's biggest incentive so far for incorporated companies came last April when he introduced a zero rate for the first £10,000 of a company's profits,' he explained. 'Since that new rate was introduced, 115,000 businesses have incorporated, which is a major increase of 28% on the 90,000 incorporations in the same period last year.'

Mr Hamper went on to add: 'Whilst welcoming measures to reduce the tax burden on small companies, we see no reason why these should not also be targeted at the unincorporated sector. We therefore call on the Chancellor to introduce a new small business allowance of £10,000 for unincorporated businesses so that they can enjoy the equal benefit of the new zero rate of corporation tax for small incorporated companies.'

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