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PBR 2008: A round-up of small business measures. By Rebecca Benneyworth

26th Nov 2008
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The key small business measures to watch out for include the following:

Corporation tax rate

The planned increase in the small company rate of corporation tax will not now happen from 1 April 2009. The increase has been deferred until 2010. This change had not yet been included in legislation, so Finance Bill will once again set the small company rate at 21%, and thus the marginal rate will remain 29.75% on profits in excess of £300,000, assuming no associated companies. This impacts on decisions about incorporation which is considered separately here

Loss relief extension

There is an extension of loss relief available to businesses allowing a three year carry back of up to £50,000 of trading losses for both income and corporation tax. However the rules will operate differently in the two taxes. It is also worth noting that in the interests of providing relief for sole traders as early as possible, the targeting of the relief for income tax businesses may be a little wide of the mark. Allowing claims for losses for the basis period for 2008/09 will not permit losses incurred in periods ending in summer 2009 to qualify for the extended relief. Given that the Treasury predictions are that the recession is still deepening, this may be of some concern. It is a difficult call, because delaying relief until the later year would not be helpful. There is a detailed article explaining the rules.

Income shifting

Although Government ministers remain committed to taking action on this, common sense has prevailed. Now is not the time for this legislation (one might add that there probably isn’t a sensible time to do it!). It is possible that a wider review of the taxation of small businesses may present the opportunity for reform along different lines. Hurrah.

Company cars

At last the transitional rules are available and those still able to afford a luxury car can now decide when to replace their current vehicle. A detailed analysis of the final rules and the best strategy for businesses is here

Taxpayers Charter

The representations made by all concerned have been heard, and the new Charter for HMRC will have statutory backing, through Finance Bill 2009. More detailed work is to come on the exact content of the charter, but all of those who contributed to the consultation though Accountingweb and other channels must be pleased with this change in policy.

Tax simplification

There is an ongoing exercise to try to simplify tax computations for small companies. The team at HM Treasury have canvassed widely among potentially interested parties to establish how material simplification could be achieved, and there is an interesting discussion document issued as part of the supplementary material. AccountingWEB will consider the possibilities in more detail later in December.

Help with tax payments

This is one of the PBR items linked directly to the HMRC home page, as the authority is keen to get the message out to businesses struggling through the recession. The principle is to enhance the existing time to pay arrangements by gearing up staffing levels and expertise to provide a response within a target time of 10 minutes. There is quite a bit of guidance (LINK : ) already available and Q and A’s for agents will be added very shortly. These will explain what the agent can do to resolve payment issues. Readers should note that these special measures are for businesses only, and that time to pay arrangements will be available for viable businesses which have a specific reason for being unable to pay.

Current indications are that HMRC has committed to this at a very senior level, in the interests of protecting small businesses (and the jobs they provide) through the recession. When a time to pay has been agreed, there will be no VAT default surcharge during the period, but interest will continue to run on late paid tax debts.

Those advising clients in need of these arrangements should ensure that all tax debts are considered at the same time in reaching an agreement – something which it has not been possible to do in the past. The new Business Payment Support Service is on 0845 302 1435 and is open Monday to Friday 8am to 8pm and weekends 8am to 4pm. This line is for new enquiries about time to pay.


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