Brown must lance tax burden on SMEs.

The Forum of Private Business (FPB) is calling on the Chancellor to relieve the taxation burden on smaller businesses in his forthcoming budget on 16 March.

Main Barrier

The FPB's Chief Executive Nick Goulding said the FPB has consistently told the Treasury that tax is one of the main barriers to growth for the SME sector.

He said: "The FPB is looking to the Chancellor to address the taxation burden as a matter of urgency. The NI contributions hike of one per cent should be scrapped; it has proven to be a direct tax on jobs and actively hampers expansion. Moreover, if Mr Brown committed to integrating PAYE and National Insurance, with an appropriate proportion of the tax designated as NI, this would significantly reduce the onerous administrative burden faced by smaller businesses, while maintaining the integrity of the NI fund."

Employment status

Mr Goulding said a clarification of employment status would also save smaller firms a considerable amount of time and money.

He said: "Many smaller businesses face problems deciding on the appropriate structure for their business and the tax they will pay as a consequence.

"It causes bureaucratic problems, with evidence suggesting that businesses are spending approximately £2000-a-year on compliance. One solution would be to overhaul the issue of who is employed and who is self-employed. It really would be much more straightforward if self-certification of employment status was introduced."

Engine room

Mr Goulding said: "It is vital the Chancellor addresses the issues that are constraining SME growth and shows that he supports the sector in this critical general election year budget.

"It must not be forgotten that SMEs are the engine room of the UK's economy, with four million businesses contributing £12 trillion to GDP, employing 12 million people and contributing to 37 per cent of UK turnover."

Major concerns

The FPB has submitted a detailed document to the Treasury illustrating the major concerns of small businesses.

The FPB's recommendations to the Treasury:

a) Bring in an impact assessment for the Budget b) Link any further rises in the National Minimum Wage to the retail price index c) Reconsider the one per cent increase in NICs d) Clarify employment status e) Close the VAT loopholes that lead to unfair competitive advantages f) Integrate administration of National Insurance and PAYE g) Increase Rates Relief thresholds to match Scottish levels h) Increase funding for workplace training i) Allow stage payments of tax monthly in arrears j) Do not make online filing of tax returns compulsory k) Introduce reduced VAT for labour-intensive services l) Reduce the rate at which the flat rate VAT scheme is levied m) Restore the capital allowances for ICT n) Do not raise tax on tobacco or alcohol o) Reduce Stamp Duty on commercial property p) Stabilise Fuel Duty by linking to cost per barrel q) Restore retirement relief on Capital Gains Tax r) Clarify settlements legislation - or scrap it s) Reduce or abolish Insurance Premium Tax on compulsory insurance t) Extend compensation for compliance costs u) Encourage Business Links to support older businesses v) Extend capital allowances for plant and machinery beyond first year w) Introduce SME grant scheme for research and development x) Seize the opportunities from merging Inland Revenue/Customs & Excise y) Implement the relief from Working Family Tax Credit z) Remove limits on the Small Firms Loan Guarantee Scheme (SFLGS)