The chancellor announced the government will double the Annual Investment Allowance (AIA) to 500,000 until the end of 2015, so starting next month 99.8 per cent of businesses will pay no tax on certain capital investments.
John Allan, national chairman of the Federation of Small Business, said: This change should encourage greater investment, and key for Government now is to increase communication about the allowance to encourage take-up.
The chancellor also announced that Seed Enterprise Investment Scheme (SEIS) which he introduced in 2011 will be made permanent and a social investment tax relief of 30 per cent will be introduced, while export finance available through UKEF will be doubled.
John Cridland, CBI director-general, said: The doubling and extension of the Annual Investment Allowance, together with making the seed enterprise investment scheme permanent, will be a shot in the arm for many medium-sized businesses.”
Matt Mead at Nesta Impact investments added: “By setting the tax relief for social investment at 30 per cent this starts to level the playing field and makes investing in social enterprises as attractive as investing in small private companies.
Loss-making SMEs will benefit from an increase in the value of R&D tax credits, while a 7bn package to cut energy bills will benefit manufacturers, it was announced.
Allan said: The 7bn package to cut manufacturing energy bills will help create jobs and strengthen this key sector.
Furthermore, Osbourne pledged a freeze in fuel duty. “The fuel duty rise will not take place and it will be 20 per cent lower than it would have been under the plans of the last government,” he said.
Alistair Bingle, MD at Bishop’s Move, the UK’s largest family owned removals company, said the announcement was welcomed by the industry despite an opportunity the government had to reduce fuel duty to further bolster the economy.