Business tax summary: a basket of reforms

Chancellor George Osborne proffered a basket of measures for business across a wide spread of issues. Many of the proposals are designed to encourage and support start up businesses, reports Rebecca Benneyworth in this quick round-up. Links are provided to HMRC's source documentation; where none are available consult the Overview of Tax Legislation and Rates (1.36Mb PDF).

Entrepreneurs’ Relief lifetime limit doubled

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Comments

AIA £50k from Apr 2012

sjmaccounting | | Permalink

Is there a typo between the above stating the AIA will reduce to £50K from Apr 2012 whereas on :Capital Allowances: AIA trimmed back" it states the reduction is to £25k (which I believe to be the correct allowance)

 

RebeccaBenneyworth's picture

Thanks, correcting it now

RebeccaBenneyworth | | Permalink

Yes, a typographical gremlin on my part. Brain working faster than fingers I'm afraid! Thanks for pointing it out.

robertlovell's picture

The ACCA’s take on Corporation Tax changes

robertlovell | | Permalink

Chas Roy-Chowdhury, head of taxation at ACCA, commented on the changes to CT:

“Reducing this rate by two per cent from April 2011, and then decreasing by one per cent for each of the spending review years, lifts a burden of taxation on companies – this is a smart move. It makes for a more competitive UK, a better place to do business.

“But growth rates are limiting the Chancellor’s room for manoeuvre. The lowering of the headline rate of Corporation Tax isn’t the only change that’s going to be happening here. There are going to be amendments to the Controlled Foreign Companies rules and changes to the rules for branch profits too, which will help make the UK more attractive as an HQ base for foreign companies. The current tax regime has made the UK unattractive for some but by creating a business friendly tax environment, the Treasury may be able to actually increase tax revenue by encouraging more companies to set up in the UK.”
 

VAT & three line account

taxmanmikewatton | | Permalink

Is there a typo here: if VAT registration threshold is increasing to £73k, should the 3-line account provision for sa Returns also not be £73k rather than £71k, which is the new de-registration threshold?

robertlovell's picture

CIOT's Northern Ireland branch adds to the CT discussion

robertlovell | | Permalink

Brendan Morris, chair of the CIOT’s Northern Ireland Branch said: “If a corporation tax rate cut worked, that would mean more companies choosing to locate themselves in Northern Ireland, generating more income tax, national insurance, business rates and VAT. However there is no guarantee that the books would balance in the Executive’s favour.”

Brendan Morris also pointed to the risk of imposing additional administrative burdens on business at a time when burdens need easing. He continued:

“The profit of a company that only operates in Northern Ireland would clearly be subject to a new devolved rate. But how would a UK-wide trader derive its Northern Ireland profits figure? How would HMRC police the split? The risk is that new rules could generate significant admin burdens for businesses and for HMRC.

“As with the ongoing devolution of tax powers to Scotland, it is essential that our politicians making a decision on whether to vary from the UK rate understand all the technical and practical issues involved. The Chartered Institute of Taxation are keen to help in this important process in any way we can.”

He concluded: “This could be a real boost to the Northern Irish economy but it would not be a one way bet.”
 

robertlovell's picture

MacIntyre Hudson reacts to business changes

robertlovell | | Permalink

Rakesh Shaunak, the London chairman of MacIntyre Hudson, said: “The changes to EIS, R&D tax credits for SMEs and the extension of Entrepreneurs’ Relief to £10 million all sound like joined up thinking for smaller, entrepreneurial companies.
 
“The Plan for Growth offers some very useful access to finance measures for SMEs. We need more detail on how the proposed Business Angel Co-Investment Fund and the £2.5 billion Business Growth Fund will operate but it does seem to be a measure to help those SMEs with the best potential for growth.
 
“Reducing corporation tax combined with removing charges for foreign investment in UK businesses do seem as if they will help Britain to become a more competitive place to do business.
 
“We’re delighted to see that the Time to Pay scheme is continuing and that UKTI will be offering more support to SMEs who want to export. Increasing numbers of our clients are looking to expand their business that way, so this is a very welcome measure.”
 

IR35 materiality: Wasn't Parliament earlier told that IR35 tax r

dstickl | | Permalink

Here's a good way to support StartUp Britain by a quick change to IR35 secondary Legisaltion:

A- As there was no change to the IR35 regime in the ’11 Budget for "growth" (contrary to the 20 May'10 announcement) may I suggest you alert the Chancellor (and PCG etc etc) to a potential change to the "Social Security Contributions (Intermediaries) Regulations 2000 SI 2000/727" Section 7 (1) Step One that reads:
QUOTE
7 Worker's attributable earnings—calculation
(1) For the purposes of regulation 6(3)(a) the amount of the worker's attributable earnings for a tax year is calculated as follows:
Step One
Find the total amount of all payments and benefits received by the intermediary in that year under the arrangements, and reduce that amount by 5 per cent
ENDQUOTE.

B- I suggest that the words "by 5 per cent" be replaced by:

"by a monetary amount that is the greater of either (1) £40,000 (forty thousand pounds) or (2) 15 (fifteen) per cent"

C- Reasons: (1) Need for economic growth to be stimulated in the private sector, eg by redundant public sector workers, with commercial certainty. (2) Some startup etc small business costs are fixed, i.e. independent of company revenue, and I have selected a "Highest Common Figure" reflecting (a) IPSA's costs for an MP's one person office in London, which is (b) justified for other UK locations because many small contractor businesses have to travel to London to work, network, for marketing, training, etc, etc.

D- More: I gather from evidence set before Parliament that the tax cost might be less than £1m pa, i.e. negligible!
And for civil servants [perhaps stimulated by self-interest, perish the thought!]: It may help newly redundant public sector workers seek new work, through releasing their entrepreneurial talent. 

If you can give this moderate proposal some more traction with your support, I'd appreciate it!

Brgds - Don Stickland, BA, MA, BA, ACMA