Government lobbied over tax increase for small companies

The chancellor has been urged to abandon a corporation tax rise on small businesses by Sheen Botanical Labels managing director Christopher Ashton-Jones.

Some MPs and business groups want Alistair Darling to scrap the increase for Britain's 4.7 million small and medium-sized firms. From 1 April, the rate paid by firms taking profits of up to £300,000 jumps from 21 to 22 per cent.

The move was unveiled by Gordon Brown in March 2007, when he was chancellor.

Ashton-Jones said: "While the Government is 'encouraging' banks to help those companies with borrowings, what about those companies who, through prudence, have little or no borrowings?

"With the prospect of reduced sales turnover and increasing margins, it is desperately important for small companies to retain what cash they can. Many, otherwise, are likely to run out of cash and go under," he said.

"The re-introduction of this zero-rate band would seem to be a simple change to the tax system, be enormously helpful to a significant number of small companies and be welcomed by the population generally as a government-inspired idea further to support the small business community."

Conservative Treasury representative Justine Greening said: "This tax is the difference between some companies continuing in business or going under."

Eighteen MPs, including Labour backbenchers, have signed a parliamentary motion calling on the Government to scrap the rise.

Up to 2006, the first £10,000 of a company's profits was zero-rated for corporation tax purposes.

- See petitions.number10.gov.uk/zero-rate.


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