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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Do you agree with Sir Alan Sugar?

It’s hardly a new issue for employers but despite its significance, many managers still seem confused by pregnancy and maternity rights.

The business case for providing decent maternity leave, support and flexible working for new parents has been repeated at length supported by considerable changes to related legislation over the years. Retaining women workers means retaining talent, ensuring diversity and ultimately benefits the company. Yet is seems confusion still reins.

When it comes to making decisions on maternity leave, pay, hours and when to go back to work, mother knows best. However, what’s best for mother and baby does not necessarily suit the employer - particularly now that parental rights have crossed the gender barrier, entitling fathers to time off to.

Read the full article here

Chancellor Alistair Darling delivered his first budget yesterday and began his speech by announcing that the British economy was growing at a faster rate than all other G7 countries and reinforced that ‘Britain was one of the best places in the world to do business‘.

The main announcements that affect UK business are outlined below.

Tax & National Insurance - The limits for the different classes of National Insurance Contributions (NICs) rise in line with inflation, with the lower profits limit for the Class 4 NICs paid by self-employed people up to £5,435 and the upper profits limit for Class 4 NICs rising to £40,040. A package of 20 tax simplification measures to help reduce red tape costs and simplify tax calculations was also announced and the enterprise management incentive tax relief scheme will increase from £100,000 to £120,000

VAT - From 1 April 2008, the VAT registration threshold will be increased from £64,000 to £67,000 and the deregistration threshold from £62,000 to £65,000, and from 1 June 2008, revised legislation will be introduced to extend the cooling-off period to six months.

Corporation Tax - The main rate of corporation tax (CT) is 28% for the 2008/09 financial year. However, there is a lower rate of 21% for small companies with taxable profits of less than £300,000. Legislation will be introduced in the Finance Bill 2008 to set the main rate of CT at 28% from 1 April 2009. There will also be a 2p cut in corporation tax for large companies, from 30p to 28p in the pound.

Capital Allowances - As announced in last year’s Budget, with effect from April 2008, capital allowances for general plant and machinery investment will be reduced from 25% to 20%. Also with effect from April 2008, capital allowances for longlife plant and machinery investment will be increased from 6% to 10%.

Capital Gains Tax - Originally announced in January this year, small and medium-sized businesses will be charged a rate of 10% Capital Gains Tax (CGT) for the first £1 million of gains. SFLG – There will be an extension of the Government’s Small Firms Loan Guarantee Scheme (SFLG) to include all businesses and an increase of £60 million in funding the scheme.

Public Sector Contracts – The Chancellor has introduced a goal for small firms to win 30% of all public sector business contracts in the next five years.

Female Entrepreneurs - there will be a £12.5m fund to help and encourage female entrepreneurs.

Cars - From 2010, new cars that emit less than 130g of CO2 emissions will pay no car tax in the first year. Those that buy the most polluting cars can expect to pay higher road tax in the first year. The increase in petrol duty will be capped at 2p this year but will be deferred until October. However, the Chancellor also announced a fuel duty increase of 0.5p per litre for ‘environmental reasons’, to take effect from 2010.

Staff – The expansion and improvement of the Train to Gain scheme was announced along with Skills Accounts to be launched by 2010 and £60 million extra funding for adult skills.

International Trade - Introduction from 2010 of an online system to help recovery of overseas VAT for UK businesses.

Parts of the Immigration, Asylum and Nationality Act 2006 came into force at the end of February and require employers to make stringent checks on foreign workers. The measures impose tough fines on employers caught breaking the law and also introduce a points-style system which takes into account the skills of migrants who want to work or study in the UK. The Federation of Small Businesses (FSB) has said that the new fines are draconian and unfair if imposed on employers who have no idea that their employees are working illegally. The Home Office has produced guides to help employers understand the new legislation.

The Control of Noise at Work Regulations 2005 (Noise Regulations) will be extended to the music and entertainment sectors as of April 2008. These sectors had been given a two-year period of grace before implementation of the regulations which have applied to other sectors since 2006. The regulations aim to protect workers from the risk of damage to hearing associated with exposure to live music. Employers will be required to manage those risks both to employees and freelancers using various control methods, many of which should be simple and low cost.