Budget 2007 Exposed. Small company tax in Budget 2007

Since 2005, with each successive budget Gordon Brown, as Chancellor has imposed huge increases in corporation tax on small business, while reducing corporation tax on big business. If you're not convinced, take this example of a small company with the following year end figures in 2010:

This is an increase in corporation tax of 1110.2%

Now take a bigger company - Exactly a  thousand times bigger in fact.

This is a decrease in corporation tax of 2.2%

This is what Gordon Brown has had to say in previous budgets:

Budget 2004 – I have cut the rate of small business tax
Budget 2005 – I am not cutting small business support – I am enhancing it
Budget 2006 – It is right today to back our enterprise culture
Budget 2007 – I shall take action in a way that will not raise the tax burden on small business

He might respond by pointing to the capital allowances that allow 100% corporation tax relief announced in the 2007 budget. Well £1,500 of the fixed assets of this small business have been assumed to have been acquired in 2010 in this example - As much as any such company would be able to sensibly afford without destroying their cashflow and their business with it.

The strategic importance of small companies in economic growth and job creation has long been recognised by the likes of the US and more recently China and other emerging economies. In the UK however they are regarded as nothing more than another source of revenue - So much for the 'enterprise culture'.

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