Last month’s Emergency Budget followed hot on the heels of Labour’s March Budget, and in the 11-plus years I have been working on Budget and Pre-Budget report activity never before have I seen such tight timings and so many motions for change!
But what did the new coalition government’s announcements bring for us small business owners?
The good news came in the form of a cut in the corporate tax rate for smaller companies from 21% to 20% next April and the 10% rate for entrepreneurs being extended from the first £2m to the first £5m gains made over a lifetime with immediate affect from 23 June 2010.
The bad news? Small independent retailers – such as many of thebestofguildford members – will feel the pinch when VAT increases from 17.5% to 20% from 4 January 2011. However, what could soften the blow is this being a key seasonal sales period and the fact consumers will have had six months to warm to the idea. For contractors and freelancers bound by the IR35 tax, no simplification or clarification just yet although a commitment to review is promised.
And just plain unfair is the national insurance tax break for start-up companies unless they are based here in Surrey! As the Guildford office of accountants and business advisers PKF (UK) LLP noted: “The national insurance tax holiday for job creation – a £5,000 national insurance break for start-up companies on their first ten employees – applies to those setting up new businesses but not in the south east of England. While this is a welcome move for the country as a whole, it is tough on the buoyant Surrey and south east entrepreneurial community.”
