Pleasant Budget surprises for SMEs

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Simon Sweetman
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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...

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By NeilW
24th Mar 2010 18:32

Small company tax really makes no sense at all

If you look at it from a public policy point of view (rather than the viewpoint of a client who understandably hates contributing to the exchequer), then the small companies corporation tax rate is an anathema (as is the Annual Investment Allowance, although I have less issue with that).

What we actually need is taxation based upon accounting profits, and actually a *higher* rate of tax for smaller companies. The general policy principle being that if you invest you pay less tax at the higher rate, your investment causes the company to grow and you will pay less tax as your investments mature into larger annual profits.

Growing companies in theory create more jobs (policy tick there), and having a lower corporation tax rate for higher rate both give companies an incentive to grow  larger profits and also helps with international tax competition (policy tick there).

The current system actually discourages people from growing their companies past a certain size, discourages using appropriate commercial structures and only really makes sense to those who are hard of accounting.



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By pnown
24th Mar 2010 20:16

lossextension carry back

 Sorry Simon but cannot seem to find anything in 2010 budget releases etc re extending the loss carry back  for another year could you point me in the right direction please

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25th Mar 2010 09:58


I did not see any news about the vat threshold, I assume that the £68,000 2009 limit still applies. 

Could force many small business's into compulsory registration...thats helping small business's, I do not think.

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By pnown
25th Mar 2010 10:04

VAT threshold

 VAT threshold has increased to £70,000 BN 45

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30th Mar 2010 16:21

Answer for pnown

Apologies for the delay in getting back to you on your question about the loss extension carry back. It seems there's a bit of a tale to tell there.

HMRC was little unclear in giving advice on this, but they have now issued a response which Simon has fed back to me.

It seems the announcement about this was actually made in Budget 2009, which was of the existing legislation.

The existing legislation (for companies, for a temporary period of two years (accounting periods ending after 23 November 2008 and before 24 November 2010) losses of those two twelve month periods may be set off against the total profits of the previous three years, up to a maximum of £50,000) and for unincorporated business for 2008/9 and 2009/10.

Hope this answers the question.

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By pnown
31st Mar 2010 12:08

Extended loss relief

 Thank you for confirming that I had not missed any new announcement but for any other readers for clarity purposes re the existing FA 2009 rules summarised above

- the extended loss carry back of 3 years is unlimited for the immediately preceding period then capped at £50,000 overall for the other 2 years for both companies and individuals.

- the carry back for  individuals is not as far as the extended 2 years is concerned against anything other than trading profits 

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