Osborne set to unveil four-pronged stimulus package for small firms
New support for angel investment
Chancellor George Osborne is expected to unveil a four-pronged offensive to help small business in his autumn statement today, with a total value of more than £300m.
Insiders predict that Osborne, who has already confirmed his intention to introduce a £40m credit easing programme, will extend the one-year business rate holiday for small firms by a further six months.
It is thought that the extension of the holiday – a tiered scheme which offers a maximum 100% relief on rates for new and growing enterprises – will cost the Treasury a total of £210m, and help around 500,000 companies.
Sources close to Osborne also expect him to encourage business angels to invest in start-up firms, by offering 50% income tax relief on investments worth up to £100,000. They add that this initiative will cost the government a further £50m.
To assist smaller firms with high growth potential, Osborne is expected to channel £50m from the Regional Growth Fund into a special business angel co-investment pot. Meanwhile, the Chancellor is likely to announce new arrangements to ensure construction firms handling government contracts get paid quickly.
Osborne’s latest raft of stimulus policies are likely to receive cautious approval from the small business community. In particular, the assistance for angel investors will meet a key demand repeatedly espoused by the Forum of Private Business (FPB).
Last week, FPB chairman Phil Orford said: “The government should encourage private lenders by easing their tax burden when they invest in small businesses, often taking risks where mainstream banks fear to tread. “It is already incentivising venture capitalists taking equity stakes in firms. Small businesses need a range of finance options but the preferred funding route remains lending at interest. Providing a tax environment that encourages private lenders to come forward will increase competition, drive up levels of service and bring down costs.”