2008 budget - forecast is bad for small business

Kashflow logo
Share this content

Following forecasts of a general slow down in the UKs economy Alastair Darling will not be giving too much away in his first budget on Wednesday. He badly needs to stimulate the economy; more profits create higher tax receipts. Neither the Forum of Private Business or Bank of Scotland are optimistic about the fate of small business and it is not too difficult to see why.

Chancellor Darling's hands seem to be somewhat tied in respect of corporation tax; Gordon Brown spoiled the show in earlier budgets announcing small company tax increases of 1% per annum. The rate has risen from 19% for the year ended 31 March 2007, to 20% for y/e March 2008, 21% for y/e March 2009 and will hit 22% on 1 April 2009. Conversely, large company corporation tax drops 2% to a rate of 28% on 1 April 2008.

On profit...

Please Login or Register to read the full article

The full article is available to registered AccountingWEB.co.uk members only. To read the rest of this article you’ll need to login or register. Registration is FREE and allows you to view all content, ask questions, comment and much more.

About AccountingWEB


Please login or register to join the discussion.

10th Mar 2008 21:17

Simon - you should know by now
Evidence that some things have worked in the last 10 years is always chance, or the result of private sector initiative against the odds

Everything that has gone wrong is the government's fault

Just like Northern Rock was 100% Labour's fault and should require compensation, and it had nothing to do with the management. No, not one thing at all


Thanks (0)
By NeilW
10th Mar 2008 19:42

Ten years growth
and nothing in the rainy day fund.

I think that qualifies as mismanagement.

Doesn't this whole article boil down to 'Those on the receiving end of a tax rise complain about it'. How is that news?

With all this whingeing when favoured sectors get their fluffy pillows taken away, is it any wonder that the government has to do its taxation by stealth.

Nobody has yet come up with a good reason why small companies should have a low tax rate, but small unincorporated businesses should not.

Thanks (0)
10th Mar 2008 18:11

Another reason that small businesses can be targeted with impunity by the Treasury (increase in CT, income shift ...) is that they can't relocate to another country (or threaten to) in most cases.

Thanks (0)
10th Mar 2008 18:03

why don't they know ?
Part of the answer, of course, is that most small businesses are not companies at all. Like most surveys, this one wanders between "business" and "company" as if they were interchangeable.

The other point is that the vast majority of small companies pay little or no CT because they have to withdraw the funds to live, and most of them still do it through salaries. They are much more concerned about personal tax (and NIC) than they are about CT rates.

Some of them (to judge from last year's FSB conference) know what is happening very well and are very annoyed by it.

Oh, and ten years mismanagement of the economy : that will be during the longest continuous period of UK economic growth on record, but presumably that happened by accident. And we're still looking at forecasts of slowdown - they may be right but it hasn't actually happened yet.

Thanks (0)
10th Mar 2008 17:48

The lie that is democratic consultation
If the Bank of Scotland, the Forum of Private Businsses, or the FSB honestly believe that Alastair Darling will take a blind bit of notice of representations, consultations, protests, or even good old-fashioned fair play then they are even more naive than I thought.

The Government has one agenda and one agenda only which is to grab as much as possible from small businesses, motorists, smokers, homebuyers, and indeed anyone else within firing range. VAT, Excise Duty, National Insurance, Penalties, Road Fund Licence, Stamp Duty .... it's all TAX, isn't it ?

The funds so raised are targeted to finance their ridiculous military junketings abroad, to make up the deficits resulting from many years (well, ten actually) of mismanaging the economy, to keep millions off the unemployment register by handing out meaningless civil service and government departmental jobs (whatever is an outreach co-ordinating adviser anyway ?) and last - but by no means least - to ensure that their own feet remain firmly in their troughs until their gold-plated pensions arrive.

A million signatures didn't prevent the disaster of Iraq, did it ?

So dont hope that your protests will change the laws; do what Accountants have done for small businesses for many years; look for ways around it..

Thanks (0)
11th Mar 2008 12:18

Small Companies and Huge Ones
It is well known in gardening (botany) that cuttings and seedlings need extra care and are kept in greenhouses etc to help them over their startup period. They are protected from the harsh weather and given extra care until ready to brave the hard elements.

If you treat those seedlings and cuttings just like hardy 2-year olds, you will loose them before they can bear fruit, and loose the investment altogether. Any good farmer will tell you similar advice.

This kind of attitude to smaller young companies creates stable companies that, in the future, will bear lots of fruit. But rip what you can too early and those companies will give less fruit to the taxman in the longer term. That is the delicate balance that should be considered by any hungry collector of taxes.

Thanks (0)
11th Mar 2008 11:30

Don't let's chuck mud
I do think small company owner/directors (of whom I happen to be one) have every right to feel aggrieved, given they're the ones who are going to get hit hardest by the rise in small company CT and by the new income shifting legislation. If big companies get their tax rate reduced and small companies get their tax rate put up it's no wonder they get annoyed.

But at the same time, though I have no brief for Gordon Brown, I do think that 10 years without a recession is a considerable achievement.

Targeted criticism will be taken more notice of than universal mud chucking.


Thanks (0)