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Owner managed businesses and entrepreneurs

The Chancellor was acutely aware that public sector expenditure cuts would increase unemployment and he announced a number of measures to ease the tax cost to the private sector of employment of staff including a regionally based holiday from employers NIC contributions for new businesses. The small company corporation tax reduction further eases the tax burden but to entrepreneurs the biggest gesture is the increase in entrepreneurs relief from capital gains tax from £2m to £5m of gains which reduces the threat of a heavy tax bill on a sale of the business

Corporation tax rate

Year by year reductions have been announced in the corporation tax rates as follows:

Capital allowances

To offset some of the benefit of the reductions in corporation tax rates, the rate at which capital allowances are given will be reduced from April 2012.

Reductions in Corporate Tax rates

The coalition government have for some while stressed the need to make the “UK PLC” tax regime more competitive and as Mr Osborne said in his speech it “is open for business”.

Reductions in rates of relief for capital expenditure

Most of the bad news for businesses in this budget concerned the reduction in the reliefs available for capital expenditure incurred by businesses. The only small crumb of comfort is that the reductions in the rates of relief are not going to be introduced until 2012.

VAT changes

The standard rate of VAT is set to rise to 20% with effect from 4 January 2011.

R&D Tax Credits for SMEs – removal of qualifying condition

The new Coalition Government has announced that it will enact a proposal to extend the scope of the more generous R&D tax credits for SMEs.

Osborne continues Government’s attack on tax avoidance

The Government has over recent years sought to clamp down on what it perceives as unacceptable tax avoidance. This theme continues in this Budget with the announcement of a consultation on an all-encompassing anti-avoidance provision known as the General Anti-Avoidance Rule, or GAAR.

Debt collection agencies to be used by HM Revenue & Customs

In an effort to further enhance HMRC’s collection of tax, it has been announced in the Budget that, following a successful pilot during 2009/10, debt collection agencies will now be used to pursue and collect debts.

Alignment of penalty regimes and safeguards for certain excise duties

The reform of the penalty regimes for the remaining excise duties not already covered was announced today in the Budget completing the reform of measures initiated in Finance Act (FA) 2008.

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