Will this Budget help young entrepreneurs?
Stephen Edwards and David Smy, Partners from HW, Chartered Accountants, met with around 100 business people from the Thames Valley region to consider what impact this Budget would have on their livelihoods.
David Smy warned that it was becoming ever more expensive for employers to take on staff, with such changes as higher National Insurance rates from April. This is despite the Government’s assurances that it is trying to encourage private firms to recruit, to fuel economic growth in the UK.
David also highlighted the questions remaining for employers over the touted National Insurance/income tax merger, with the Chancellor announcing plans for a long-term consultation.
Another area flagged up was that of the Childcare Voucher Scheme. David advised employers of higher-rate taxpayers who wanted to take advantage of the schemes’ tax and NIC free exemptions before they change, to join before 5th April.
Stephen Edwards said that increasing fuel costs were another factor when trying to save money and those business people who commute long distances should check whether it is still cheaper to use their own car or pay income tax on a company car.
The Chancellor has confirmed that the ‘disguised remuneration’ legislation first announced in December 2010 will be introduced from April 2011. Executives will no longer be allowed to be paid in tax-free, life-time loans that are never repaid.
On a positive note, the Government has made much of ‘enterprise’ and, generally, Haines Watts recognised that the creation of some 21 new Enterprise Zones will benefit those whose businesses are in the right location (so far the nearest location announced is London, with most being in the Midlands and North). Meanwhile, the Enterprise Investment Scheme (EIS) is being made more generous and may help some businesses with the right investment opportunity.
For SMEs, R&D tax credit rates have been increased and other proposed changes should enable more businesses to benefit from the increases. Stephen added that a one-year business rate holiday, due to end this October, has been extended by a year so that small businesses with a rateable value of less than £6000 will not pay business rates for that period – a boost particularly for retail businesses.
He also highlighted the fact that Entrepreneur’s Relief will increase to £10 million from 6 April 2011, which will benefit certain people who sell companies or stakes in their own firms for a large sum.
As announced previously, corporation tax rate charged to small firms will drop to 20% next month but there are no future tax cuts offered, compared to the more favourable 5% drop in rates for bigger firms over the next four years, bringing their rate down to 23%.
The Chancellor said that his was a “Budget for Growth, Enterprise and Aspiration”, but have we heard it all before? The virtually unanimous opinion from Haines Watts’ guests was that the 2011 Budget didn’t support business despite the fact that it will have to be business that revives Britain’s ailing fortunes.
What do you think? Will this Budget help you with your business needs?
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