Rob Stevens, Chief Executive of the British Marine Federation, has expressed disappointment at the Budget plans to raise VAT by 2.5 per cent.
The industry is still in the early stages of recovery following the financial crisis and anything that increases the cost of sales for marine businesses could be very damaging, he said. The increase in Insurance Premium Tax also falls into that category and will again push up costs for already-stretched businesses.
‘One of the measures which we will be assessing are Government plans to increase VAT to 20 per cent from 17.5 per cent which will hit our members, and their customers, just as the economy starts to pick up.
‘We will also be watching to see how the national insurance holiday to start-up firms will work and hope that their success can be balanced with that of existing businesses.’
The Chancellor George Osborne’s announcement that the Government will increase the Enterprise Finance Guarantee – for this year – by £200 million to support additional lending of up to £700 million for small businesses is welcomed by the industry. Access to finance has been a real problem for many small businesses in the marine industry and the Government’s Green Paper on business finance, which will consider the broad range of finance options for businesses of different sizes including bank lending, equity and corporate debt, will be scrutinised closely.
The BMF was pleased to see that there will be a reversal of the planned increase in employer National Insurance Contributions. We also welcome the employer NI relief for new businesses set up in targeted regions, which applies to the first ten employees hired in the first 12 months. However, we will be keen to see that existing businesses and those based in areas such as the South East and Eastern region are still given the support they need.
Other measures announced which are welcome to the industry are:
A reduction in the small profits rate (previously the small companies’ rate), decreasing to 20%, compared with the pre-announced rate of 22%, benefiting some 850,000 companies,legislation to allow for a temporary increase in the level of small business rate relief, for one year from October 2010.