The Government has let employers down by failing to provide a timetable for relieving them of the burden of paying working tax credits to their employees, according to the Federation of Small Businesses.
The FSB complained that administering benefit payments such as tax credits and statutory maternity pay places a “huge burden” on small businesses which, unlike most large firms, do not have separate payroll departments.
FSB tax policy chairman Neil Hamper said: “At the last budget, the Chancellor said that he accepted the case for the Inland Revenue paying the working tax credit directly to claimants. But almost one year on we still have no idea when this change will take place.
“The FSB is taking the Chancellor to task because the state, not employers, should pay benefits. Not only has the government let employers down by failing to act, it has also disappointed employees, many of whom object to their boss knowing personal details about them such as their family income.”
Budget submission
In its Budget 2005 submission the FSB also calls on the Chancellor to:
- “Take back responsibility for paying statutory maternity pay so that it is paid directly to mothers by the government
- Listen to its own think-tank, the Institute of Public Policy Research, and overhaul inheritance tax so that no tax is paid on estates worth less than £350,000, and
- Ensure that measures to improve access to public sector contracts for small businesses are not undermined by the government drive to cut costs and rationalise its supplier base.”
‘Less brutal’ tax regime
The FSB unveiled six “key principles for a general election year” last Thursday, telling candidates that a commitment to fairer and simpler taxes could be the key to millions of votes.
Taxation is one of the FSB’s six key principles, based on responses to a dedicated election email address set up to allow its 185,000 members to set out their election priorities.
The FSB said red tape, employment law and crime all proved to be major concerns for business owners, but a commitment to fairer and simpler taxes for small businesses “looks set to be a vote winner”.
FSB national chairman Carol Undy said: “With an average of 6,000 small businesses per constituency, would-be politicians would do well to listen to entrepreneurs.
“Our snapshot suggests that taxation will have the biggest influence over which box business owners tick. Tax cuts will be important at the forthcoming election but small businesses also want a taxation regime that is fairer and less brutal.”
The FSB said it is calling on the political parties to commit to:
- “A £10,000 tax-free allowance for firms irrespective of status
- The state, not employers, to administer all benefit payments
- A full review of the climate change levy
- Abolition of the IR35 legislation
- VAT-free movement of goods between registered traders
- All business premises with a rateable value of less than £25,000 to benefit from small business rates relief
- Gross payment for small contractors under the construction industry scheme, and
- The UK to resist further tax harmonisation across the EU and to remain outside the euro-zone.”