Certain announcements were put forward by the Chancellor in the 2009 Budget today which affect business. The Chancellor firstly stated that he expects to see economic growth returning by the end of 2009 and predicts growth of 1.25% and 3.5% in 2010 and 2011 respectively. Public borrowing is set to increase to £175bn in 2009 and decrease in subsequent years. Although inflation is expected to fall to around 1% by the end of 2009, the Retail Price Index may fall to -3% before moving back to zero in 2010.

Taxes
• Individuals with incomes over £150,000 per year will be taxed at 50% from April 2010, with a 42.5% rate for dividend income
• From the 2010-11 tax year, the basic personal allowance for income tax will be gradually reduced to nil for individuals with “adjusted net incomes” above £100,000
• From 2010-11 there will be increases to the trust rate and dividend trust rate to match those for income tax
• The measure includes new powers to vary the income tax rates for the charges that apply to registered pension schemes.

These changes replace the announcements made at the 2008 Pre-Budget Report. The reduction of personal allowances affects those with incomes over £100,000 and the new tax rate affects those with incomes over £150,000.

General Business Measures
• The standard rate of VAT will remain at 15% until December 2009, and return to 17.5% from 1st January 2010
• The VAT registration threshold will rise to £68,000 from 1st May 2009
• Enhanced loss relief announced in the 2008 Pre-Budget Report will be extended for an additional year
• HMRC’s Business Payment Support Service to be expanded for those businesses which are genuinely unable to pay their outstanding liability immediately or enter into a reasonable time to pay arrangement.
• Confirmation that businesses can spread payment of this year’s inflation up-rating to business rates over three years, as announced on 31 March 2009
• A ‘top-up’ trade credit insurance scheme to help businesses maintain their finances, in which Government will offer to match private sector trade credit insurance provision, for a temporary period, if insurers reduce cover to any UK business
• For a temporary period, a vehicle scrappage scheme, co-funded with industry, that will enable consumers who scrap vehicles older than ten years to replace them with a brand new vehicle at a discount of £2,000.
• A temporary increase in capital allowances to 40 per cent for one year, with effect from April 2009, to allow a higher proportion of private investment to be offset in that year against taxable profits
• A £750 million Strategic Investment Fund to support advanced industrial projects of strategic importance, of which a third of the funding will be earmarked for low carbon projects
• Implementation of a package of reforms to the taxation of foreign profits, including the introduction of an exemption for foreign dividends, supported by limited restrictions to the interest deduction rules.

Figures released by Barclays which show the number of new businesses reveal that the start-up market remains robust, despite the economic recession. The number of new businesses rose from 432,300 in 2007 to 436,600 in 2008 and the total number of businesses increased by 1 per cent to just under 2.9 million firms.

There could be a number of reasons for the rise, including individuals made redundant opting for self-employment. In terms of percentage growth women outperformed in comparison to the national average and overtook men. Female-only starts ups increased by 9 per cent to more than 90,000 in 2008 compared to 83,000 in 2007. Male-only start-ups showed a slight increase of less than 1 per cent, to 300,000.

At a regional level there were contrasting fortunes, start-up activity increased by 8 per cent in Yorkshire and 6 per cent in the East Midlands. However, the number of businesses started up declined by 6 per cent in Wales and 3 per cent in the South West.

There is some indication of the development of the economy over the past year in the business sector pattern of start-ups in 2008. New property service firms fell by 13 per cent and there was an 8 per cent decline in businesses associated with construction. In contrast, start-up activity in the area of health, education and social work increased by more than 13 per cent.

The Bank of England has cut interest rates to a new all-time low of 0.5% and said it was now boosting the money supply to help revive the economy.

Interest rates have now been reduced six times since October, and the latest half a percentage point cut from January’s 1% had been expected.

The Bank said it would expand the amount of money in the system by £75bn in an attempt to boost bank lending. The idea is that if the amount of money in the system is boosted, commercial banks will find it easier to lend.

Quantitative easing is sometimes incorrectly referred to as printing money, but the Bank will not expand the supply of money by making new banknotes. Instead, it will buy assets - such as government securities (gilts) and corporate bonds. But as it will not borrow to fund the purchases, it is creating new money. Though this latest cut should help support business and consumer confidence, it it may not have a dramatic impact on the cost or availability of credit.

Here are ten key reasons for business failure:

• Inferior strategy or business model- Are you pushing water uphill?

• Weak leadership and management- Could you or your top team be the problem?

• Lack of forward business planning- To get to your destination, you normally need a map!

• Insufficient demand for goods or services- Are your products or services fit for purpose? Are your sales team letting you down?

• Difficult or unprofitable customers- Low margins create losses. Bad debts can be fatal.

• Unreliable or uncompetitive suppliers- The best way to hand business to your competition.

• Unnecessary or badly managed staff- What do you need to get the job done?

• High fixed overheads- Sales are down, but those costs keep on rolling.

• Poor risk management- Watch out for that incoming missile!

And last but not least….

• Cashflow problems - talk to your customers and suppliers and offer incentives of paying early.

Dragons’ Den winner Levi Roots has launched a new competition offering cash prizes for the UK’s most dynamic family-run businesses.

The Reggae Reggae Sauce creator has agreed to head up the judging panel for Barclays’ Family Affair Awards.

There are approximately 3 million family-run firms operating in the UK, and Barclays Local Business wants to reward and celebrate their contribution to the nation’s economy.

Winning businesses across nine regions will each receive a £1,500 cash prize, with the overall champion scooping £5,500 in cash plus a year’s unlimited access to a Barclays Business Angel.

The competition is open to entries from any member (aged 18 and above) of a UK-based family-run business.

Potential contestants are asked to answer a few simple questions about their business, such as how it was started, how the family has worked to make it a success, and what are their future ambitions.

A judging panel will then reward the family firms that display the most significant degree of enterprise, success, and dynamism.

Urging families to enter the competition before the 31 March closing date, Levi Roots said:

“I’m looking to find the UK’s most exciting and enterprising family-run businesses in order to help them along the way. With the help of Barclays Local Business, we are going to inject a bit more spice into the prospects of these fantastic enterprises in 2009.”

For more information about the Family Affair Awards, visit the Barclays Local Business website

Up to £5,000 worth of business advice is on offer for the company that comes out on top to win the Nottinghamshire Business Awards 2009.

Firms from across the county are invited enter this year’s competition and showcase their successes, talents and products.

Now into their twenty-third year, the awards are free to enter. Although businesses from all sectors are welcome to put their name forward, the contest is primarily aimed at growth-orientated businesses developing new techniques, products and services.

Awards are up for grabs in the following categories:

Nottinghamshire Company of the Year.
Nottinghamshire Small Business of the Year.
Nottinghamshire Young Businessperson of the Year.
New Enterprise of the Year.
Business Innovation.
Winners in all sections will receive a commemorative trophy, but the entrant crowned the overall Nottinghamshire Company of the Year will also scoop £5,000 worth of business advice from competition sponsors KPMG and Nottinghamshire County Council.

Entries must be made by 27 February, with the winners set to be announced at a glittering ceremony to be held at Nottingham City Council House on 7 July.

To register an interest in this year’s competition, visit the Nottingham Evening Post website

Small business legislation is a colossal subject area and new regulations are being introduced in 2009. Below is a summary of some of the main forthcoming regulations that might affect you and your business.
• Extension to holiday entitlement - Parts of the Working Time (Amendment) Regulations 2007 come into force in April 2009, increasing statutory leave from 4.8 weeks’ paid annual leave to 5.6 weeks. Bank and public holidays can be included in a worker’s minimum holiday entitlement; alternatively they can be offered in addition to the minimum entitlement.
• The Health and Safety Offences Act 2008 - The Act comes into force on 16 January and will increase penalties and provide courts with greater sentencing powers for those who breach health and safety legislation. The Act raises the maximum penalties that can be imposed for breaching health and safety regulations and broadens the range of offences for which individuals can be imprisoned.
• VAT Flat Rate Scheme entry - With effect from 1 April 2009, the test that requires a business to check that its total income is less than £187,500 for entry into the VAT Flat Rate Scheme will be removed. Instead, eligibility to join the scheme will be determined solely by the taxable turnover of the business, which must be less than £150,000.
• Corporation tax - The 2008 Budget revealed somewhat controversial plans to raise small business corporation tax to 22% in April 2009, up from 21% in 2008. The Chancellor announced in the Pre-Budget Report back in November 2008 that he would postpone the rise until 2010. The stalemate scenario affects businesses with profits of up to £300,000, which could provide some welcome relief for small firms.
• Extension of trading loss carry back - Usually, a company can carry back a trading loss that occurs in an accounting period for 12 months and offset the loss using profits gained from any source. New rules for 2009 mean that companies can carry back their trading losses for up to three years, in certain circumstances, and for accounting periods that end between 24 November 2008 and 23 November 2009. Unincorporated businesses can make a claim for trading losses for the tax year 2008-09.
• Empty property rate relief - The Pre-Budget Report brought both good and bad news regarding empty property rates. The good news is that properties with a rateable value below £15,000 are exempt from paying business rates. The bad news is that, after months of campaigning by businesses and the property sector to get the unpopular empty property levy scrapped, the tax remains in place, affecting owners of vacant properties that have a rateable value of £15,000 or more.

The banking industry says it will help small business customers in difficulty during the economic downturn by revising their guidelines for dealing with customers.

The banking industry has come under intense government pressure to pass on cuts in interest rates and help firms who may be running into trouble.

However the new guidelines put the onus on small businesses customers to ask for help early, and warn that banks will still have to protect themselves.

The guidelines have been published by the British Bankers’ Association (BBA) and include:

• pro-active contact by banks if they think firms might be in trouble
• banks to offer to discuss all concerns in person
• banks will look to use business assets as security before they consider personal assets as security
• business account switching within 5 working days
• banks helping customers to revise their business plans and forecasts during the recession if necessary.

The guidelines have been revised after consultation with the Department of Business, Enterprise and Regulatory Reform (BERR).

However the new BBA guidelines state clearly that a firm in trouble which has agreed a rescue plan with its bank may find that its borrowing costs go up as part of the process - but the bank will explain why.

The chancellor announced a series of tax-cutting measures in yesterday’s Pre-Budget Report. The main changes include:

1. The main rate of Value Added Tax will, from December 1st, be reduced from 17.5% to 15% until the end of 2009.

2. Deferral of the increase in the small companies’ rate of corporation tax. The rate will stay at 21% from April, instead of rising to 22% as previously announced.

3. National Insurance rates will increase by 0.5% from 2011 - for both employers and employees.

4. A 45% rate income tax band will apply to salaries of £150,000 and above after the next General Election.

5. The £120 rebate for basic rate taxpayers will remain and will be increased to £145 from April 2009.

6. A new Small Business Finance Scheme to support up to £1 billion of bank lending; a separate £1 billion guarantee facility to support bank lending to small exporters; a £50 million fund to convert businesses’ debt into equity; and a £25 million regional loan transition fund.

8. Introduction of a new HMRC Business Payment Support Service to allow businesses in temporary financial difficulty to pay their HMRC tax bills on a timetable they can afford.

9. Changes to the taxation of foreign profits - including the introduction of a foreign dividend exemption for large and medium-sized businesses, supported by a worldwide debt cap on interest.

The current economic climate is acting as a spur for thousands of people to become their own boss and to start a business from home, according to a new report by Enterprise Nation and BT.

The 2008 Home Business Report, launched as part of Small Business Week 2008, highlights a 16 per cent rise over the last year in the number of businesses being run from home. There are now more than 2.5 million home businesses, accounting for more than half (53 per cent) of the 4.7 million small and medium sized enterprises in the UK.

Home based businesses are also bucking the trend when it comes to confidence in their prospects during the financial crisis. They are buoyantly optimistic about beating the adverse economic conditions, with 72 per cent planning to win new customers over the next six months, two thirds (66 per cent) planning to increase turnover and more than half (58 per cent) developing new products and services.

The freedom to make their own decisions is the most popular reason (33 per cent) why home based business people enjoy being their own boss, closely followed by the benefits of a better work/life balance (24 per cent).

The use of technology is a critical factor in the start up and growth of home businesses - a view held by 82 per cent of business owners, with more than half of them (52 per cent) spending between 500 to 1,000 on Information Technology each year.

Home business owners view their spending on technology as a valuable return on investment as it helps to keep their costs low and their sales and productivity high.