How Will The Pre-Budget Report Impact Your Business?
If you’ve been paying any sort of attention to the news this week, you’ll probably be aware that the Chancellor released his pre-budget report on Monday. This report is likely to have a major impact on your business, whether or not you are VAT registered.
I’ve outlined the main points below:
VAT From Monday 1st December, the VAT rate will go from 17.5% to 15% for at least a year. If you are VAT registered, you will need to use the new rate as of this date. HMRC have issued detailed guidance on this.
The new calculation for working out VAT is now 3/23.
CORPORATION TAX The Government is deferring for a year the planned increase to the small companies rate of corporation tax. The rate will remain at 21% for 2009-10.
EXTRA LENDING UK small businesses should also be able to benefit from around £4bn of lending from the European Investment Bank (EIB) between 2008 and 2011. Approximately £1bn of these funds should be available by the end of 2008. The Government will launch a newFinance Scheme to support up to £1bn of bank lending, together with another guarantee facility for up to £1bn of bank support to small exporters. It will also make available a £50m fund to convert businesses’ debt into equity.
TAX PAYMENTS Businesses in financial difficulty will be able to spread payment of their tax bills over an indefinite time period. A new Business Payment Support service has been launched to help businesses calculate over what period they need to spread their corporation tax, VAT, PAYE, income tax and national insurance contributions in order to remain profitable.
LOAN AVAILABILITY The Chancellor announced he has instructed banks to maintain the availability and active marketing of competitive loans to small businesses at 2007 levels. In particular, he praised RBS for its announcement it is not going to increase pricing on SME overdrafts, which he said ‘should become the benchmark for all UK banks’.
EMPTY PROPERTIES These properties will be exempt from business rates over 2009/10, as long as they have a rateable value of less than £15,000, which the Treasury says will exempt approximately 70% of empty properties.
OTHER CHANGES There are other planned changes, but they have not been implemented as yet. These include changes to Business Rates. The Government is planning to legislate to give businesses more time to pay certain backdated business rates bills issued before 31 March 2010. Businesses facing such bills will be able to pay their liability for previous years in equal interest-free installments over eight years, rather than immediately.