Small Business Pre Budget Announcements

Just got this, courtesy of our accountants.

Capital gains tax - The early days of the new government has signalled major reform to the Capital Gains Tax system. The Coalition agreement says “We agree to seek a detailed agreement on taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities”

Corporation Tax - George Osborne has confirmed that he intends to reduce the headline rate of corporation tax by simplifying reliefs and allowances.

A change to the rate of Corporation Tax can take place relatively easily and is desirable to retain international competitiveness. But significant changes in Capital Gains Tax mid year could cause all sorts of distractions ranging from its transit through Parliament to problems with the ultimate drafting and adoption of the legislation.

History has told us that CGT is a voluntary tax and at times of high rates the tax take has gone down. In addition Tory voters would probably be the hardest hit and the current Government may not want to alienate its core voters.

However a change in the VAT rate would be much simpler to achieve and would have a fairly immediate effect. The downside is that any increase could dampen consumer spending or fuel inflation. Most of the work involved in a change of rate would be passed to businesses to adjust prices, software etc.

A new report by Kelkoo, the shopping comparison website, has calculated that a rise in VAT to 20 per cent would generate an extra £11.5 billion of government income but would add an average of £425 to each household bill.


I'd watch out if you took full advantage of a depressed stock market, capital gains will be coming after you in the near future

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Steve

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I would pay a one of tax say of £425 to reduce the debt burden to help bring the debt down quicker to a level where people felt a bit happy going forward.

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