"Financing projects from £50,000 to £100 million"

PM to announce National Insurance cut for small businesses

PM to announce National Insurance cut for small businesses

David Cameron is promising to introduce a number of helpful measures for small businesses, including a deterrent for large firms to avoid paying their invoices on time.

The Prime Minister will announce plans drawn up by the Coalition to cut National Insurance bills for small firms and charities by up to £2,000 through a new “employment allowance”.

The National Insurance Contributions Bill would result in around 450,000 businesses, most of which will have fewer than 50 employees, being taken out of National Insurance Contributions altogether, the Government said.

The move has been welcomed by the Federation of Small Businesses, which says that the savings would generate growth and boost employment.

“It will have a positive impact on small firms and the economy when it comes into force next spring,” said the Federation's chairman, John Allan.

“Our members have said they’ll spend the savings on their business, either through investing in the business, increasing wages or taking on staff.”

Mr Cameron will also propose that large companies who abuse their position should face fines via a Prompt Payment Code if they fail to pay smaller businesses on time.

According to Government sources, 85% of SMEs have experienced late payments over the last two years.

It is an issue that small firms have been afraid to address for fear of upsetting their big-name customers, said the CBI Chief Policy Director, Katja Hall.

Measures such as supply chain finance agreements would further strengthen the position of small businesses, she added.

To John Allan, the focus on late payments is a welcome one, as it would offer firms and their employees greater stability.

“Being paid late or given extended terms can severely hamper many small firms,” he said.

“They simply don’t have the same cash-flow buffer as a large business, so being paid on time can be the difference between being able to pay staff and not.”

The Government will hope that these measures demonstrate support for small businesses, which have struggled to access finance in recent years.

Though the Funding for Lending Scheme was launched in August 2012 to support lending, participating banks have largely shunned businesses to concentrate instead on the residential housing market.

Monday, 14 October 2013 11:01
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