Macario Lewin's Blog

The 2010 Budget and Small Businesses – Martin Macario picks a few highlights

As expected there were no real surprises in todays Budget. The usual increases in fuel, cigarettes and alcohol duties, especially cider, were announced however the Chancellor is staggering some of these increases by up to 4 years. 

One of the highlights, but not unexpected, was that stamp duty will no longer apply for house purchases below £250,000 for first-time buyers, but only for two years.  However stamp duty on residential property sales over £1m increases to 5% from April 2011.

So what about help for small businesses?  Whilst some allowances and thresholds e.g. VAT registration, have been increased there does not appear to be any immediate savings and of course the increases in income tax and national insurance, as previously announced, apply from April 2010.  Whilst there is a £2.5bn package for small businesses to boost skills and innovation and a one year business rate cut from October to help 500,000 companies I think the two key points to mention are:

1.     The Annual Investment Allowance i.e. purchases of plant and machinery that attracts 100% tax relief, has been doubled to £100,000. This increase could save small companies an extra £11,000 in tax or for sole traders potentially up to £25,000 per year.  The stumbling block though is whilst small businesses wish to make suitable investments in plant etc it has proved extremely difficult to raise finance.  To rectify this, the Chancellor has announced that RBS and Lloyds Bank Group are to provide £94bn in small business loans backed up by a new service to adjudicate credit disputes.   

 

2.     Entrepreneurs’ relief i.e. a lifetime tax relief on business capital gains has also been doubled to £2m.  Not much has been mentioned about this but it has the potential to be an extremely valuable relief, especially in cases whereby a sole trader or professional has incorporated his own business. 

 From April 2010 a top rate of income tax of 50% now applies on earnings in excess of £150,000. Further, a ½ % increase in national insurance also now applies to all and there is a gradual removal of the Personal Allowance for those earning over £100,000. The ongoing clampdown on tax avoidance also continues.

Given the increases in income tax and national insurance it is vital that small businesses, whether trading as a sole trader or limited company, take advantage of available allowances and to review their tax affairs regularly to take advantage of potential tax planning opportunities.

 

A few impending dates to note:   ·       6 April 2010                     2010/11 Tax Year begins.  ·       19 April 2010                    Final Payment of PAYE/NIC for 2009/10 ·       19 May 2010                     Filing deadline for Employer End Of Year Returns

 

Martin Macario is director of Macario Lewin Ltd. The views expressed are his own.

Macario Lewin sponsors local football team

We are delighted to sponsor the football kits for Lisvane Panthers U10 Orange.  The boys were presented with their kit on Saturday and wasted no time in changing into their new shirts.  

 

Of course, it wouldn't be a Macario Lewin occasion without jelly beans.  

 
 

Good luck Lisvane Panthers from everyone at Macario Lewin. 

Medical professionals take note! Tax Health Plan closes 31 March 2010

HM Revenue and Customs have launched a  disclosure opportunity called a  ‘tax health plan’ aimed at medical professionals, presently only doctors registered with the GMC are within the plan.   This scheme is open until 31 March 2010 and those who now disclose previously undeclared income are offered a reduced penalty of 10%.  Once the window closes those that have not come forward but are found to have unpaid tax liabilities may face penalties of between 20% and 100%.  It follows that come 1 April 2010 HMRC enquiries may be focused on such professionals and their practices.

 

Please feel free to contact us should you have any queries or require assistance.