Small businesses are set to benefit from a raft of changes announced in yesterday's Budget, including the introduction of the Employment Allowance, concessions on real time information (RTI) operations for PAYE payments and measures designed to encourage investment in start-ups.

John Walker, national chairman of the Federation of Small Businesses (FSB) said: 'The Chancellor has pulled out all the stops with a wide-ranging package of measures to support small firms which would restore confidence and growth for small businesses.'

Estimates suggest that the Employment Allowance will benefit around 450,000 small companies and charities by taking the first £2,000 off their employer National Insurance bill.

Graham Farquhar, employment tax partner at Ernst & Young described this as 'a huge boost to small employers', saying that almost a third of all employers will no longer pay any employers' NI.

Natalie Langley, small business specialist at PwC, said: 'According to government figures this equates to one new worker paid £22,400 with no additional employer tax to pay. This works out at more than £5.9bn taken off small companies' national insurance bills between 2014 and 2018.'

The Low Incomes Tax Reform Group (LITRG) welcomed news that the RIT requirement is to be relaxed for small businesses.

LITRG chairman Anthony Thomas said: 'Permitting employers to report slightly later, when they complete a normal monthly payroll process, rather than requiring them to do so on or before the payment, is welcome. This will now allow many small businesses, which might have struggled with RTI, to use it with minimum disruption.'

The Budget also included new measures designed to encourage more investment in the SME sector, such as an extension to the capital gains tax reliefs available to investors in small, early-stage companies.>

David Bywater, tax partner at KPMG said: 'Extending the Seed Enterprise Investment Scheme is clearly welcome, and abolishing stamp duty for AIM listed companies sends out a message that London and the AIM market is the place to list and raise finance for fast growing companies.'

On the downside, David Kilshaw, tax partner at KPMG, warned that some small business owners who have given their homes as security against a business loan may now find they face a potentially increased inheritance tax bill, as the Budget provides that debts to fund a business cannot be used to avoid an inheritance tax bill on other assets.

Kilshaw said: 'This is a nasty shock for business owners. They will now have to budget for unexpected inheritance tax bills and they may be faced with a horrible choice - do their heirs sell the family home or does the business pay the tax?'

Debbie Griffiths, private markets tax partner at Deloitte, also raised concerns that new rules on the use of partnerships could hit the large numbers of unincorporated small businesses who use genuine LLP structures, while she said measures designed to encourage more employee share ownership could fail because of the administrative burden involved.

There was a mixed reaction to the employee share scheme programme. 'The government's proposals to offer people extra tax relief for giving up some employment rights may be attractive to a small number of employees joining start-ups. However, for the employing company, if they wish to keep to the minimum £2,000 tax free value, this could be complex to administer,' Griffiths said.