Good News on the Tax Front
Chancellor Delivers Some Rare Good News
THE ECONOMY will probably head back into recession next year if someone in Europe forgets to pay their credit card bill again. That was the overriding message from the Chancellor’s recent Autumn Statement.
There are, however, a few things that business owners can cheer about on the tax front.
Public sector employees may not be happy about paying more for their pensions but the Government is much more fearful of a hiring and investment strike by business owners – a far more deadly type of industrial action than any trade union can muster.
With this threat in mind, the Chancellor managed to conjure a few rabbits out of his hat:
Seed Enterprise Investment Scheme (SEIS)
Details are a bit sketchy at present but starting in April 2012 it will be possible to invest up to £100,000 in a new business and effectively claim a cashback from the Government of up to £50,000. There will also be an additional capital gains tax exemption for those who sell an asset and reinvest the money through SEIS. Taken together, this means up to 78% of an investment in a new business could be paid for by the taxman.
Compulsory Employer Pensions
This new business tax was dreamt up by that old central planner Gordon Brown and means that all businesses will eventually have to make pension contributions for their employees.
For big companies it all kicks off next year but some smaller businesses with less than 50 employees were due to be forced into the system from March 2014. The Government has now pushed this starting date back to May 2015.
The pensions minister Steve Webb said: “We recognise that small businesses are operating in tough economic times.” Perhaps he read a recent survey which revealed that smaller businesses plan to stop hiring or fire staff to cover the cost. A beginner’s guide to economics would have also told him the same thing!
Full details will only be published in January next year but we hope that the annual increase in employer contributions from 1% to 3% will also be pushed back.
Over the last few years income tax, national insurance, VAT and capital gains tax rates have all been increased. Although the country will have to borrow over £100 billion more than originally planned over the next five years, it seems that business owners will not have to pick up the tab this time around.
The Chancellor announced that the main rate of corporation tax will be reduced from 26% to 25% as planned and recently published income tax and national insurance rates for 2012/13 show that some individuals will actually pay less tax next year.Business Rates
Small businesses with a rateable value of between £6,000 and £12,000 will see their rates relief stretched from October 2012 to April 2013. Larger businesses will be able to defer 60% of the rate increase, due to come into effect in April 2012, by spreading it across the following two years.