Family businesses have been given a little room to breathe after the Chancellor Alistair Darling recently stated that they would not be liable for new tax laws until at least 2010.

Darling, who had announced a clamping down on families who split their income from their family run businesses in order to benefit from a lower tax bracket, declared that due to the current financial difficulties facing the country these families would be given a further year, at least, until they would be in a position where this would not be tolerated by the Government.

The news has been welcomed by freelancers, according to John Brazier, managing director of the PCG (Professional Contractors Group).  Brazier said, “The UK’s freelancers and other small businesses are pleased that the Government has reached the right decision, but concerned they have done so for the wrong reasons. We needed to see a firm commitment from the Government to drop the proposals and an acknowledgement that they were wrong; instead, we have a commitment to defer them and keep them under review owing to the economic circumstances.”

The Professional Contractors Group represents the many thousand freelancers in the UK.  The group have also released their response, frosty as it may be, regarding the corporation tax laws for small business in the UK.  “PCG advised the Government not to pursue either of the courses of action it proposed – we are pleased that it is focusing on making the existing rules work properly as we recommended” said Brazier.

Policy manager of the Professional Contractors Group, John Kell, was as pleased with the delay on family business tax clamp downs as his colleague, stating, “We are pleased with the decision. Having said that they have reached the right decision for the wrong reasons. We want to hear that they have got it wrong and the changes are not justified or workable. What we have instead is that they are being deferred because of the current economic conditions.”

However, it’s not all happy critics for Alistair Darling’s postponement plans as many advisors are now saying that the Chancellor should have thrown out the proposal altogether.  Richard Mannion, national tax director of Smith and Williamson, welcomes the move but also recognises that the danger is still around the corner.  “I still believe the long term aim is to bring small business corporation tax up, large business tax down and align them,” he said.  “Hopefully income shifting rules have been kicked into the long grass, but the threat is it’s still just a deferral.”

Once again the Federation of Small Businesses can be heard calling for more for those businesses it represents, as John Walker, FSB national policy chairman said, “The government has seen sense by deferring an increase in the small companies tax rate, but it is a pity it did not go further by introducing a cut, returning the rate back to 19%. This would deliver real results.”

Postponing the tax crack-down will be providing business with a staggering £1 billion back over three years.

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