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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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.