500,000 of Britain’s smallest companies will have paid £2.4 billion more in tax between 2006 and the end of the next tax year thanks to Gordon Brown’s changes to small companies tax.
The figures, compiled from answers to parliamentary questions, reveal that Gordon Brown’s decision to abolish the starting rate of corporation tax (of 0%) in 2006 meant over 250,000 of the least profitable companies became liable for the full small companies rate, now at 21%.
In total, some of Britain’s most marginal companies will have paid as much as £900 million in extra corporation tax by next year, when previously they were exempt.
Also hit are companies with profits of just £10k-£50k, a quarter of a million of which will have paid as much as £6,194 more in tax by 2009. This is due to Mr. Brown’s decision to remove the Marginal Starting Rate Relief from corporation tax.
Both these groups of companies also faced a second wave of tax rises due to Labour's increase of the small companies rate from 19% in 2006-07 to a planned 22% in 2010.
Justine Greening, the Shadow Economic Secretary, condemned Labour’s approach to Britain’s small companies:
“At a time when 1 in 10 businesses are reported as being on the brink of failure, these figures reveal the truth about how Gordon Brown has treated Britain’s small businesses over the last 3 years. It is as if he has tried to tax our smallest companies out of existence.”