Large businesses will be enjoying a reduction in corporation tax to 24% next month (April 2012) and a further reduction to 22% in 2013 but businesses with profits below £300k will be unaffected by corporation tax rate changes. The banks also dip out on this tax cut as they are being hit with a levy to make sure they don’t benefit from this tax cut.
Sunday retail trading hours are being extended for 8 weeks in the summer to coincide with the Olympics but will these 8 days of extra trading hours really have significant impact?
Those businesses connected with broadband infrastructure, those businesses in rural or poor broadband speed areas may benefit from the pledged investment in this area. Those holding contracts with the Ministry of Defence for accommodation improvements and also those involved in making cycling around London safer could also benefit in investment in these areas but this is very targeted investment which will not benefit the vast majority of businesses.
The other major announced additional funding is the £20billion being made available for discounted loans subject to the new National Loan Guarantee Scheme. The devil may well be in the detail however as to how easy in practice these will be to secure.
The higher rate of income tax came down to 45% and low to middle income earners will have a bit more cash to spend, although not until next year when the personal allowance rise kicks in.
We will also await to see if the simplification of the tax return process for small businesses has any material effect.
Those businesses operating in haulage and distribution have not been helped as the fuel duty has not been changed so businesses operating in the transport arena will continue to face financial pressures.
Pensioners will lose the “old age” personal allowance next year and state pension age will be regularly reviewed so expect to work longer before drawing state pension.
The wealthy whilst gaining on the income tax rate change will lose out with stamp duty on house sales over £2m increasing to 7%, earners over £60k will lose child benefit and those earning over £50k will lose some of this child benefit. In addition, the higher rate (40%) income tax threshold is being reduced by £1k next year.
The usual favourites continue to go up with tobacco rising 5% above inflation and whilst the rise in alcohol duty remained unchanged, it still continues to increase by 2% above inflation.
What does this mean overall?
You may not be able to afford to drown your sorrows or smoke yourself into an early grave but this will enable you to work longer before you draw your state pension.
Whilst there are some positive messages in the budget, there are few measures that will have a significant impact to help those small and medium sized businesses that are already struggling financially and/or are loss-making unless your business can benefit from the investment offered from funding that can be secured via the national Loan Guarantee Scheme.
If you or your clients are in this position, early consultation is always recommended to help find a solution to the way forward.