Home Business News Tax break should include London firms – Labour

Tax break should include London firms – Labour

by LLB Reporter
4th Jan 12 8:36 am

Labour has called on the government to expand a National Insurance tax break to include new businesses in London.

New companies outside of the capital, the South East and the East of England can take advantage of a tax holiday worth up to £5,000 for each of the first 10 people they employ. The scheme was created last year to encourage private sector growth.

But just over 10,000 businesses have used the tax holiday so far at a cost of £6m and supporting only 12,400 jobs, according to Treasury figures – a fraction of the £1bn set aside to assist an estimated 400,000 firms. Labour said the administration costs alone for the scheme are approximately £12m.

Shadow treasury minister Owen Smith has called for all small businesses to be made eligible for the scheme, including those based in London and other regions originally excluded from the incentive.

Smith said: “The one flagship policy that could have made a difference has been a total flop, supporting just one in 40 businesses who were promised help.

“And shockingly, the government is set to spend twice as much on admin costs than it has so far paid out in support to businesses.

“At a time when small businesses and our flat-lining economy need all the help they can get, George Osborne should now extend the scheme so thousands more companies can benefit.

“As part of our five-point plan for jobs Labour is calling for this tax break to be extended to support all existing small firms who take on extra workers.

“This will help small businesses grow and create jobs and it can be paid for using the money left over from the government’s failed scheme. Out of touch ministers need to wake up to the jobs and growth crisis facing our country in 2012 and start doing something about it.

“They also need to realise that more people out of work on benefits just makes it harder to get the deficit down, which is why the government is now set to borrow a staggering £158bn more than they planned.”

A spokesman for the Treasury said the government had numerous devices in place to aid small businesses.

He said: “We are also cutting the main rate of corporation tax, extending the small business rate holiday, supporting access to finance through the National Loan Guarantee Scheme and reducing regulatory burden through the Red Tape Challenge.

“Over 10,000 businesses have already been helped by the scheme, with these employers benefiting by an estimated £6m. But more businesses could benefit and HMRC has been working to increase this number.”

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