The Federation of Small Businesses (FSB) has welcomed many of the measures in the Emergency Budget, praising the government for listening to concerns from businesses.

The FSB commended the Treasury for listening to concerns about hiking Capital Gains Tax to 50 per cent, and welcomes moves to increase the entrepreneurs relief threshold to £5m from £2m.

This relief was called for by the FSB under the previous administration. The move to reduce the smaller companies tax rate to 20 per cent is welcomed and will help over 850,000 small firms.

The FSB also supports proposals to exempt new businesses from NICs but believes this should also be extended to existing businesses, which have the capacity to employ people. This scheme should also be made UK-wide, the FSB said.

Government plans to hike VAT to 20 per cent from 17.5 per cent will hurt small businesses in the high street, the body warned. For many small businesses, insurance on many items is a must and the proposal to increase Insurance Premium Tax (IPT) from five to six per cent is a tax on responsible business and should be reversed, the FSB said.

John Walker, national chairman of the FSB, said, 'We welcome moves to give a national insurance holiday to start-up firms, but are concerned that with 70 per cent of firms operating below capacity, those businesses already trading will not be helped.

'We need to see a full reversal of NICs increases to fully offset the ‘tax on jobs' which the previous administration initiated.'