The budget contained a couple of nice surprises for small businesses, but perhaps the government won’t be quite as nice when the election is out of the way, argues Simon Sweetman.
So, what was in it for you? Those who wait for plums from the Budget are generally doomed to disappointment, so no holding back on NIC increases - but it was never very likely. This was never going to be a tax cutting budget.
Regulars may know that I am a fan of the Annual Investment Allowance. The increase in the AIA to £100,000 will affect a relatively small number of businesses (those with capital expenditure between £50-100k) but they may well be a crucial sector. It may actually enable genuine investment by that minority of small businesses who want to invest and grow.
When I was told that he might double entrepreneurs’ relief from CGT I assumed that meant CGT rates were going up, but no.
This of course allows the chancellor to pitch himself as a champion of small business, as the Tories are talking about abolishing AIA and cutting the main rate of CT – which of course helps big business. I suspect this is the big idea here, because nobody wants to go into an election tagged as a friend to the banks.
Very importantly (and despite constant rumours to the contrary), the business payment support service is to continue (through, says the chancellor, the next parliament). An independent review is to be required, but only where debt exceeds £1m. Not a problem for small business, then.
Usefully, the extended loss carry back provisions will be extended for another year, both for income tax and Corporation Tax. That (hopefully) takes them close to the end of their useful lives – anyone still making large losses by then is likely to have gone out of business!
The long awaited simplification (and improvement) to the Associated Companies rules is still on the agenda, but not until 2011.
The abolition of the furnished holiday lettings provisions will go ahead. HMRC has been unusually unwilling to listen to suggestions here, and expected clarifications have not yet surfaced. This will be a mess.
There is to be a new tax relief for the video games industry (subject to details, consultation with Europe), since this appears to be the one industry where Britain still leads the world. Will video games become the new film investment scheme?
We are promised that by the end of 2011 a business will be able to see all its tax liabilities etc in one place online. I think there is a special category for promises based on IT (pre-broken, perhaps). The same may be true for the promises about high speed broadband.
Overall, there was no harm done to small business, and some improvements - but we know that we will have to wait for somebody’s Finance Act No.2 for this year, and with the election out of the way they may not have to be nice to us.