Page last updated at 15:26 GMT, Wednesday, 22 April 2009 16:26 UK

Firms get help with credit risks

Olympic construction site in London
Companies working in the construction sector could benefit from the Budget

A scheme to help firms cope with credit risk has been unveiled in the Budget, along with other steps aimed at helping the UK's struggling businesses.

Companies would also benefit from an increase in tax relief on capital spending, Mr Darling said.

And loss-making companies would be able to claim back tax paid on profits made in the past three years, he added.

Business groups welcomed some of the steps but said the chancellor could have offered further help.

"Given the most difficult economic conditions for a generation, the chancellor has gone some way towards alleviating the short term pressures facing companies," said Gilbert Toppin, chief executive of the EEF manufacturers' association.

Although business leaders will hate the new top rate of tax, their chagrin may be tempered by the succour their companies are being offered
Robert Peston, BBC business editor

"Though he should have gone further to make a real difference," he added.

The Federation of Small Businesses said it was disappointed that there was no reduction in business rates.

"Small firms will also be disappointed not to have received the benefit of automatic rate relief. This would have boosted small businesses to the tune of £400m."

Insurance scheme

The credit insurance scheme will provide cover to businesses operating in the UK for six months if their private insurers reduce their cover.

Harry Murray
What most concerned me was the amount of borrowing
Harry Murray, Small business owner

Such insurance is vital to protect small firms against late payment.

It will be available to the 14,000 businesses that already use credit insurance.

"Over the past 12 months the reduction in credit insurance and in some instances the withdrawal of it has hurt both retailers and suppliers and created much uncertainty in the sector," said Tarlok Teji, an analyst at consultants Deloitte.

"Any move to boost confidence must therefore be supported," he added.

Tax and investment

Mr Darling said that firms with cash flow problems would benefit from a programme allowing loss-making firms to reclaim taxes paid on earlier profits.

BUDGET 2009

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The scheme will be extended to allow firms to reclaim taxes on profits made in the past three years and will be available until November 2010.

He said that 100,000 businesses would have their full current losses wiped out.

The chancellor also said that he would double the level of tax relief on capital spending to 40% for one year to encourage firms to invest.

'Succour'

BBC business editor Robert Peston said support for businesses in the Budget totalled more than £3.3bn, with the one-year increase to 40% in tax relief to businesses on capital spending set to cost £1.64bn.

"So although business leaders will hate the new top rate of tax, their chagrin may be tempered by the succour their companies are being offered," he says.

In other measures, Mr Darling said the hard-hit construction sector would benefit from £500m to kick start construction on stalled housing projects.

The automotive industry was another sector targeted.

Mr Darling announced a scheme that will offer motorists a £2,000 discount if they trade in cars that are more than 10 years old when they buy a new car. The scheme will run until March 2010.

Borrowing worries

Harry Murray, who runs a joinery business in Staffordshire, said that there was little in the Budget that would help his business directly.

But he welcomed measures to boost the housing market and to reduce the tax burden on small firms.

"What most concerned me was the amount of borrowing. They'll have to claw that back somehow," he said.

"You've got to pay that back, and for them, that means taxes," he said



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