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BUDGET 2010
The Budget brought a small cheer for small businesses with a doubling
of the Annual Investment Allowance (AIA) next year and a big increase
in Entrepreneur's Relief, but it was mainly the lack of bad news that
was welcomed:
- VAT rates are untouched - as are Income Tax and CGT rates - though
some commentators are predicting a post-election rise.
- No change to the Business Support Service, so tax deferment should
still be available over the next year, with perhaps some stricter enforcement
and stiffer questioning at the outset
- In one of several green tax incentives, zero-emission goods vehicles
will now attract a 100% first year capital allowance
- The cut in small business rates will also be good news later this
year.
- Since small business owners are typically lower earners, the cut in
SDLT for first time buyers will help many of them, perhaps relieving
their businesses of the need to draw extra funds to cover the stamp
duty on the first house. However, this cut is widely expected to be
offset by a hike in house prices, especially those hovering just under
the previous £125K threshold.
- Many of us were expecting to hear the date from which all VAT-registered
businesses will be expected to file their returns online - currently
this only affects those turning over more than £100,000 - but
there was silence on this point today. This seems inevitable, but at
least it's not a current priority.
- There was definitely a sense of "it could have been worse"
when Alistair Darling sat down - NICs and small company CT are still
going up by 1% next year, but at the moment there's nothing worse on
the horizon. That's no doubt going to be in the second 2010 Budget.
- Under this government, the theme of anti-avoidance is never far away
and the Chancllor announced a clampdown on loans to members of "close
companies" (five particpants or less) that are subsequently written
off. The Finance Bill will include clauses denying Corporation Tax deduction
for the amount of any write-off, effective from 24 March 2010. Also
promised is a "significant restructuring" of the legislation
covering transactions in securities. A wider range of companies will
be covered and a new income tax advantage test and new exemption covering
fundamental changes in ownership of close companies will be introduced.
The overriding message for SMEs seems to be "steady as she goes":
nothing here to rock the boat - although some stormy waters are foreseen
ahead, especially if we get a change of Government in May. In the meantime
the increase in the AIA limit means that fairly modest capital expenditure
will obtain full tax relief for the time being, a measure which in itself
will be an economic and morale boost to SMEs who are starting to come
out of the recession.
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