How the Pre-Budget report affects small businesses

There was much to digest from the Chancellor’s Pre-Budget Report on Monday. The headlines for small businesses are as follows:

VAT
VAT has been cut from 17.5% to 15% between 1 December 2008 and 31 December 2009. This will create an administrative burden for small businesses. If you haven't already made the change, please call the office on 0845 201 1580 and we'll talk you through it.

Corporation Tax
The planned rise in corporation tax for small firms from 21p to 22p (planned for April 2009) will be deferred.

Funding for small businesses
The temporary Small Business Finance Scheme, which will make £1billion available in loans for small firms, sounds like a great idea. The key to its success will be how accessible these funds will actually be. Wow will be keeping a close eye on how the scheme works in reality.

Spreading your tax bills
Although the Chancellor confidently stated that struggling businesses will be able to spread their VAT, corporation tax and NI contribution payments over a longer period, the reality of achieving such payment plans is often more tricky. Please speak to Wow before contacting The Revenue as we will be able to advise on the best way of dealing with them.

Offsetting losses
The tax repayment scheme for previously profitable businesses will be extended so up to £50,000 of losses can be offset against profits made over the last three years.

Income Tax
The £120 rebate for basic rate taxpayers, introduced in the wake of the 10p tax row, is made permanent and increased to £145 from April. If you are earning more than £150k per year, you may find yourself taking home a little less if the proposed 45% higher income tax rate comes into force in April 2011, as planned.

National Insurance
All rates of National Insurance contributions will be increased by 0.5% for employees and employers from April 2011.

Empty property relief
Small firms will get a temporary increase in threshold for empty property relief. For 2009/10 empty commercial properties with a rateable value below £15,000 will be exempt from business rates.

If you would like to discuss in more detail what these changes mean for you and your business, please call The Wow Team on 0845 201 1580 or e-mail us your questions to info@thewowcompany.com