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Small Business Rate Relief Scheme

The FSB has urged the Prime Minister to introduce two measures as part of his economic revival package.

The FSB letter identified the fact that many businesses are unaware of the SBRRS (Small Business Rate Relief Scheme) which aims to reduce rate bills for all small companies whose rateable value is under £15,000 by as much as 50%.  The FSB is asking the government to ensure this relief is automatically applied.  A recent survey carried out by the FSB showed that in Essex alone, £48.4million of rate relief went unclaimed.

In addition, the FSB wants the Prime Minister to use his existing powers in the Rating Act 2007 to introduce the same measures for entrepreneurs with empty commercial properties.

If you believe you are entitled to this relief, please let your local council know.

 

Pre-Budget Report - November 2008

VAT

As expected, the Chancellor announced in the pre budget report the first ever reduction in the standard rate of VAT.  As a measure to 'kick-start' the economy the effect will be immediate and take effect as of 1 December 2008.  From this date you should be charging VAT of 15% on all standard rated sales.

It is also worth checking that all suppliers are charging you the correct rate of VAT from this date.  The rate will be in effect until at least 31 December 2009.

If you are using any third party software providers to prepare your own sales invoices and/or VAT returns, you may need to contact their relevant support lines to assist you in making any necessary changes.

Although the reduction in VAT claimed most of the headlines, changes to the business tax regime are worth mentioning.

Business Payment Support

While HMRC have often been willing to negotiate for overdue VAT and PAYE payments businesses have historically found it difficult to agree payment schedules for overdue Corporation Tax.

The Chancellor announced, to assist cash flow within small businesses, that HMRC will be more willing to set up 'payment strategies' for companies struggling to meet their Corporation Tax payments.  HMRC have announced the existence of a business support line (telephone number 0845 302 1435) which is now open.  It is still the taxpayer's responsibility to approach HMRC if they are struggling to meet any tax deadlines.

Small Companies Corporation Tax Rate

It had been announced in previous budgets that the small company corporation tax rate was due to rise by an extra 1% from 1 April 2009 to 22%.  However, this has been put on hold for a year and is now expected from 1 April 2010.

Trading Losses

For one year, businesses with year ends later than 24th November 2008, trading losses can now be carried back against profits for the previous three years rather than the usual one year.  Losses are applied against the later years first.  This is a rather important point as it currently allows small businesses to obtain relief at higher rates (21% then 20% then 19%) and large companies at lower rates. (28% then 30%).

One potential downside is that the losses carried back in excess of one year are restricted to a maximum of £50,000.

Company Cars

There have also been changes in the treatment of company cars with emissions in excess of 160g/km.  Capital allowances have been reduced and changes have been made to the treatment of lease payments on these vehicles with regard to the disallowable element.

If you think you may be affected by this, please contact us and we will be happy to help.

Income Shifting

The Chancellor once again has decided to place the notorious income shifting legislation of hold until further notice.

Personal Tax

The Chancellor decided to continue with the 'inflated' personal allowance for another year.

From April 2010 the personal allowance will be restricted.  Taxpayers will lose £1 of personal allowance for every £2 earned in excess on £100,000 to a maximum restriction of half their personal allowance.  Any earnings over £140,000 will continue to reduce the personal allowance by the same rate with no restriction.  These changes result in an effective 60% marginal tax band for individuals.

From April 2011 there will be an additional higher rate tax band of 45% for taxable income over £150,000 (37.5% for dividends).

National Insurance

From 6 April 2009, the UEL (Upper Earnings Limit) for NI Contributions will be raised to £43,875 to be in line with the higher rate tax band.

From 6 April 2011 the other NI thresholds will be aligned with the tax bands but increased by 0.5% (Class 1 and Class 4).  This includes earnings above the UEL (increased to 1.5%).  In addition, the increase also applies to employers NI contributions.

 

Insolvency rate to rise by 'catastrophic' amount

According to a poll by insolvency trade body R3, the insolvency rate for small businesses could rise by as much as 41% in 2009 compared with 2007.

The survey highlights the gloomy state of the current economic market and shows a large increase of lenders securing debt against individual homes.

With little light at the end of the tunnel, businesses and individuals must face up to today's tougher climate.  Please contact us if you would like us to help you plan for the future.

National Minimum Wage changes

From October 2008, the national minimum wage increased again:

Aged 22 and over	£5.73	(£5.52)
Aged 18 to 21	£4.77	(£4.60)
Aged 16 to 17	£3.53	(£3.40)

The government is becoming concerned that large numbers of employers are not paying the relevant NMW and have increased the resources allocated by 50% to tackle non-compliance.  Our payroll software automatically verifies compliance with NMW rates, so we are in a position to assist you with your payroll and NMW checks.

Deadline reductions for filing statutory accounts

Any accounting period commencing after 6 April 2008 will have to implement the new Companies Act 2006.  One of the major changes that will effect everyone is that the legislation reduces the period for filing accounts from 10 months to 9 months for private companies.

For example, if your company produces its accounts annually to 31 March, then your new filing deadline will be 31 December of the same year.

New late filing penalties

Also in the new Companies Act are increased penalties for late filing of accounts.  Due to the reduction in filing time there is a clear danger of more late filing penalties.

The new penalties compared with the old ones are below for private companies:

	File before 1 Feb 2009		File on/after 1 Feb 2009
Less than 1 month late	£100		£150
Between 1 and 3 months late	£100		£375
Between 3 and 6 months late	£250		£750
Between 6 and 12 months late	£500		£1500
Over 12 months late	£1000		£1500

In addition to these increases, the penalties will be doubled for any company that files their accounts late having also filed them late in the previous year.

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