According to figures released by the Treasury, the highest growth in UK companies has been in small firms with 10 or more employees. These companies have been responsible for the creation of at least 54% of jobs during these times when employment growth has been stagnant. Where larger firms have been downsizing and ridding companies of jobs, small firms have been steadily growing.
Tax cuts will be backdated to April of this year and they will further be doubled to £1 by April of 2012. These measures are meant to be an incentive to investors to start, run and grow a business in the UK. The tax relief will raise the percentage from 20% to 30% for EIS (Enterprise Investment Scheme) investments.
The go ahead was granted by the European commission for the Chancellor to move on these proposals which had been floated into the current budget. The intent of these tax incentives is to promote the growth of those small firms who are taking a chance in Britain by providing investment capital and jobs for citizens of the UK.
Currently the job market is at a near standstill and it is government’s desire to reward those investors who are willing to take on a risk. It is Osborne’s hope that tax incentives will be a healthy alternative to taking loans from banks in order to help those small firms continue at their current rapid rate of growth. Since 54% of the jobs created were created within this sector, he sees it as a wise investment in the future job market of the UK.
Although this has not yet been voted into law, Treasury is confident that the tax break law would be changed when Parliament reconvenes after recess. Brussels gave the thumbs up so it is all but a done deal.