But it was the 2% fall in Corporation Tax – which came into effect on 1 April – that will give the majority of firms the most encouragement. Corporation Tax is also scheduled to fall by a further 1% in each of the next three years to 23% – the lowest level in the G7.
Mr Osborne also confirmed an agreement with several of the UK’s leading banks in an effort to improve SMEs’ access to credit. Known as Project Merlin, the initiative commits Royal Bank of Scotland, HSBC, Barclays, Lloyds Banking Group and Santander to making £190 billion worth of credit available to SMEs in 2011 – up 15% on 2010.
The government has additionally brought forward the creation of a Green Investment Bank to 2012, which will be tasked with providing credit to assist with the running of long-term, green projects in the UK, drawing upon £3 billion worth of credit – three times what was expected.
Twenty-one Enterprise Zones will also be established across England that will look to encourage growth in those areas through tax breaks, reduced planning restrictions and superfast broadband.
Osborne further pledged to reduce the excessive administration burdens on small business owners by cutting back red tape through tax simplification – with the merging of income tax and National Insurance contributions to be considered.
Though the UK economy contracted in Q4 2010, it is hoped that these measures will provide businesses with the impetus necessary to grow once again.
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