How will the budget impact your business?
The budget on Wednesday contained a number of measures that will impact on your business:
- Cutting National Insurance Contributions for employers by raising the threshold by £21 per week from April 2011
- An increase in VAT from 17.5% to 20% from 4th January 2011; the flat rate scheme will be adjusted accordingly
- A reduction in the main rate of corporation tax to 24% over four years
- A reduction in the small profits (Small Business) rate of corporation tax to 20% from April 2011
- An increase in the personal allowance for basic rate taxpayers under 65 of £1,000 from April 2011
- A £200m increase in the Enterprise Finance Guarantee (EFG) fund for small businesses finding it difficult to access finance from conventional sources
- Reductions in capital allowances
- An increase in capital gains tax to 28% for higher rate taxpayers, with a rise in the Entrepreneurs’ Relief lifetime limit from £2m to £5m.
- With the exception of businesses in the London, The East and South East of England, exemption of new businesses from paying National Insurance Contributions on their first ten employees, up to an allowance of £5,000.
Forthcoming measures will include:
- A review of small business taxation
- A consultation to review tax on intellectual property, research and development tax credits and the proposals by the Dyson review promoting research and innovation
For retailers there are no further duty increases in alcohol, tobacco and fuel duties. Current zero-rated goods, including food, books and children’s clothes, remain unaffected. There were concerns that HMRC’s Time to Pay scheme might be scraped, however businesses will still be able to defer and spread their tax and VAT liabilities in certain circumstances.