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Budget Resolutions and Economic Situation

It is worth bearing it in mind that of the just over 4 million small businesses in this country, about 3.4 million are sole traders and are therefore taxed through the income tax system. Because of small business rate allowances such as the annual investment allowance, which is quite generous—many forms of business spending that people might typically contemplate are deductible—if a business invests, say, just over £2,300 in additional investment, the amount of tax that it has to pay is reduced. The regime that we are putting in place helps small businesses and individuals who benefit from the lower rate of income tax and the annual allowance. The research and development credits that are available will also help businesses do more. It must be right that we focus our tax allowances on the behaviour that we want to encourage, and we want businesses to do more research and development and to reinvest and grow, because that is how they will flourish. Our regime is and will be beneficial for small businesses and I believe that we will see that sector grow.