New rates of national insurance and corporation tax are implemented from tomorrow. The good news is the tax free personal allowance is increasing by £1000 but the higher rate tax threshold has been reduced.

Check out a table of the changes here

The chancellor presented the 2011 budget on 23rd March. The main announcements that affect businesses are outlined below.

George Osborne intends to make the UK the best place in Europe to start, finance and grow a business and will implement the following to strive to achieve this:

Reduce the main rate of Corporation Tax by a further 1 per cent. From April 2011 the rate will be reduced to 26 per cent and by 2014, it will be reduced to 23 per cent

Implement its Corporate Tax Road Map, including introducing new Controlled Foreign Company (CFC) rules to allow groups based in the UK to compete more effectively with those based overseas, and consult on the Patent Box

Increase the personal allowance for under 65s by £630 in April 2012, with the higher rate threshold unchanged, a further step towards the £10,000 personal allowance commitment

Simplify the tax system, responding to the work of the Office of Tax Simplification (OTS), abolishing 43 tax reliefs

Consult this year on the options for integrating the operation of income tax and National Insurance Contributions (NICs).

Drop existing proposals for specific regulations which would have cost business over £350 million a year

Introduce a moratorium exempting micro-business and start-ups from new domestic regulation for three years from the 1st April 2011

Implement the proposals of Lord Young’s review of Health and Safety

Launch a public thematic review to reduce the stock of regulation, with a presumption that burdensome regulations will be removed

Streamline the system for planning applications and introduce new fast-track planning for major infrastructure

Reform the Enterprise Investment Scheme (EIS) and Venture Capital Trusts, including raising the rate of EIS income tax relief to 30 per cent from April 2011;

Increase the SME rate of R&D tax credit to 200 per cent from April 2011 and 225 per cent from April 2012

Double the lifetime limit for Entrepreneurs Relief to £10 million

Invest £100 million in science capital development; and launch the first Technology and Innovation Centre in high value manufacturing.

Extend the limit for capital allowances short life assets election from four to eight years

Establish 21 new Enterprise Zones

Fund an additional 80,000 work experience places for young people, ensuring upto 100,000 places will be available over the next two years

Fund up to 50,000 additional apprenticeship places over the next four years and expand the University Technical Colleges programme to establish at least 24 new colleges.

Change the underlying indexation basis for direct taxes to the Consumer Prices Index (CPI) from April 2012. For the duration of this Parliament, the annual increases in the employer NICs threshold, the age related allowance and other thresholds for older people will be over-indexed compared to the CPI and will increase by the equivalent of the Retail Prices Index (RPI)

Cut fuel duty by 1 pence per litre on Budget day. The fuel duty escalator will be replaced with a fair fuel stabiliser that increases tax on North Sea oil production when oil prices are high. The April 2011 inflation-only increase will be delayed to January 2012. The April 2012 increase will be delayed to August 2012. The Government will increase the Supplementary Charge on oil and gas production to 32 per cent from 24 March 2011

The Plan for Growth published alongside this Budget, contains four overarching ambitions that will ensure progress is made towards achieving strong, sustainable and balanced growth. The ambitions are to:

· create the most competitive tax system in the G20;
· make the UK the best place in Europe to start, finance and grow a business;
· encourage investment and exports as a route to a more balanced economy; and
· create a more educated workforce that is the most flexible in Europe.

From 1 March, businesses must ensure their websites comply with rules set by the Advertising Standards Authority. The Committee of Advertising Practice (CAP) has produced a website audit service to help advertisers understand whether their online marketing communications comply with the new rules.

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.

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 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 new minimum wage levels which came into effect today (1 October 2008) are as follows:

5.73 per hour for workers aged 22 years and older
A development rate of 4.77 per hour for workers aged 18-21 inclusive
3.53 per hour for all workers under the age of 18, who are no longer of compulsory school age

New laws will come into force in October that govern the display of company names at premises. The Companies (Trading Disclosures) Regulations 2008 are effective as of 1 October this year, and will mean that companies will have to display their registered name at their registered office and their inspection place, as well as any place where a company carries on business. Registered names must be displayed in a position where they can be easily seen by visitors. Furthermore, a company’s registered name, number, place of registration and registered office address must be displayed on business letters, e-mails, websites and other documentation.

An exception to the rule is for home based businesses whose company name does not have to be displayed at a location which is primarily used for living accommodation.

Following the Chancellor’s announcement, the basic Personal Allowance for the 2008-09 tax year is increasing by 600 from 5,435 to 6,035 and the basic rate limit is reducing from 36,000 to 34,800.
As a result, many employees will see their tax code change in September. The new tax codes must be applied on the first payday on or after 7 September 2008.

Recent reports from Unite claim that some staff are being paid below the minimum wage and restaurant owners are using tips to bring the hourly wage up to the legal minimum. Some firms keep part of the service charge paid whilst a BBC investigation found Italian chain, Carluccio’s paid some waiters �3.75 an hour, which is well below the legal minimum.

Restaurant groups were found to hold back a proportion of staff tips, including Pizza Express - which keeps 8% - and The Real Eating Company food chain in Sussex, which retains 22%. Staff at one Tootsies restaurant in the home counties complained the company kept 60%.

The Unite union is calling for changes to legislation to crack-down on those employers who use customers tips to pay their staff the legal minimum amount.

New businesses should ensure they adhere to minimum wage regulations.

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