Small firms want tax incentive

The Federation of Small Businesses is calling on Chancellor Gordon Brown to give small companies, including design groups, greater incentive to invest, primarily through changing business taxation policies.

FSB’s submission, A Fairer Budget, proposes that tax relief on business loan interest be charged at source, eliminating paying interest on top of interest.

“Because of the tax system, it makes better sense to invest in somebody else’s business rather than your own and it’s a big problem. Small businesses find it hard to build a capital base and have to depend on banks for financing,” says FSB financial chairman Tony Miller.

“We are urging the Chancellor to recognise that investment within the business sector is low compared to the UK’s international counterparts,” he adds.

Other proposals include tax relief on pension provision and the option to pay tax on a monthly basis.