Tony Cohen, head of the entrepreneurial business team at Deloitte, comments:

"We welcome the fact that the Chancellor has announced a number of relatively small measures which together will certainly help entrepreneurs and SMEs in the current economic environment.

The introduction of the extended, albeit temporary and limited, trading loss carry back measures will help businesses to recover tax paid in earlier years and is a throw back to the previous recession of the 1990s.  In view of the current economic climate, the question is whether the £50K limit is enough to give the boost needed.  The benefit is quantified as £10,500 for businesses paying at the small companies rate (21%) and £14,000 for full rate corporation tax payers (28%). 

The Chancellor did not announce measures to allow entrepreneurs any relief for the significant capital losses that they may be accruing on their assets which in some cases they are having to liquidate in order to support their struggling businesses.

The deferral for one year of the rise in the small companies rate of corporation tax is also welcome – although it is just for one year.  Will this be a sufficient amount of time for these businesses to recover as they will likely need more time to rebuild?

Along with this postponement in the corporation tax rate comes the creation of a new Business Payment Support Service which will allow businesses in temporary financial difficultly to manage their tax payments to assist overall cash flow.  This is essentially a welcome Government loan at a time when some a finding it hard to obtain bank finance.

The availability of cash looks generous.  £2 billion in two new but temporary guarantee schemes as well as £50 million of equity type finance.  We are hoping to see details which will allow entrepreneurial businesses to qualify for funding and not fall foul of the banks’ credit committees.  In addition, a further £1 billion of European Investment Bank funds will become available in the next six weeks for the UK banks to lend only to SMEs.

On the face of it there is a massive pot of up to £3 billion available to the UK’s growing businesses.  The big question is how, how much and how easily they get their hands on it.  Entrepreneurial businesses need funds to flourish and all the measures in the Chancellor’s Pre-Budget Report, most especially the access to cash, will focus the mind of the UK’s entrepreneurs.”

Ends

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country's leading professional services firms.  Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein, whose member firms are legally separate and independent entities.  Please see www.deloitte.co.uk\about for a detailed description of the legal structure of DTT and its member firms.  The information contained in this press release is correct at the time of going to press.