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Budget: VAT hike `bad for businesses`

An increase in VAT would be `bad for business`, according to a survey carried out in March - three months before the Budget was delivered yesterday.

According to uSwitchforbusiness.com, 87% of SMEs (Small and Medium Enterprises) felt that a rise would have a negative effect. A third said that it would put people off spending.

Implementing the VAT changes last year, apparently, cost 18% of SMEs up to £1,000 each.

19% of those questioned said that another increase would force them to pass the cost on to their customers, possibly making it harder for them to compete effectively.

Jake Ridge, uSwitchforbusiness.com`s small business energy expert, commented: "SMEs seem to be very clear about one thing - a VAT rise will be bad for business. They need support from the Government to help safeguard their future - a VAT hike could be one blow too many for businesses who have faced the brunt of the recession and are now battling their way to recovery."

Insolvency trade body R3 commented on the Budget just after it was delivered.

R3 President Steven Law said: "The increase in VAT starting in January next year will be a further blow to those struggling businesses that rely on consumer spend, making spending more expensive at a time when consumers are already tightening their belts."

"From the individual`s perspective," said a spokesperson for the IVA Advisory Centre, "the VAT rise is just one part of the Budget. Many will welcome the increase in the personal income tax allowance, but other things, like the freeze in child benefit, will have a negative impact on people`s finances as time goes on.

"The changes - good and bad - will affect some more than others, and adjusting to them could make it harder for people to see where they stand financially. If anyone finds they`re struggling with their debts, they should get some professional advice - they may need to consider a debt solution such as an IVA."

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The IVA Advisory Centre are a licensed Insolvency Practice, offering debt advice as well as IVAs and a comprehensive range of other debt solutions. If you are in debt and would like to explore your options, contact one of our advisers today.