Tax change hits consultancies

Chancellor Gordon Brown today revealed plans to increase the tax rate on small companies from 20p to 22p by 2009.

The plans, outlined in his budget speech at lunchtime, have taken small businesses such as design consultancies by surprise.

Simon Sweetman, from the Federation of Small Businesses, reacted strongly, suggesting it was a cynical measure.

‘On the face of it, the rise in the small companies corporate tax rate is very disappointing, because it is addressing a problem that I don’t think exists, which is the notion that people incorporate for tax reasons. It certainly was true at one point, but I really don’t think it happens any more,’ he says.

Other measures for business include a reduction in corporation tax, from 30p to 28p, beginning next April.