Pre-Budget Report 2009: the key points for businesses
Article Date: Dec 09 2009
The PBR delivered mixed news for SMEs
Alistair Darling has pledged some help for growing businesses in what might be his last pre-Budget report, but employers will be less pleased about the planned rise in national insurance.
Here, we round up the key measures that will affect small and medium-sized enterprises (SMEs).
National insurance hike: Contributions from employers, employees and the self-employed will be raised by 0.5p from 2011.
Corporation tax rise deferral: The planned 1p hike in corporation tax for profits under £300,000 to 22p in the pound has been delayed.
Time to pay extended: The “time to pay” scheme, which allows businesses to spread tax payments, is to be continued ‘for as long as it is needed’, says Darling.
Empty commercial property relief: The threshold for empty property relief has been extended so that properties with a rateable value of less than £18,000 will be exempt from paying rates.
New “capital growth” fund: Yet another new fund promised to help SMEs, worth £500,000 this time. It remains to be seen whether this will be any easier to access and apply for than previous measures.
Enterprise Finance Guarantee (EFG) extended: The EFG replaced the Small Firms Loan Guarantee Scheme and is intended to encourage banks to lend to businesses by underwriting a portion of the debt. This is to be continued.
Support for research and development (R&D): Companies promoting R&D will be eligible for a 10p corporation tax rate. Potentially very useful for some companies but details are still to be announced.
Green measures: Income generated by small-scale renewable energy facilities (such as wind turbines or solar panels on your roof) is to be tax-free. A ‘boiler scrappage’ scheme is to be launched to encourage people to replace inefficient old boilers with greener models. Company car tax is to be abolished for electric cars and there is a renewed commitment to installing smart meters in homes by 2010 and providing funding for home insulation.
Bankers’ bonus tax: While it is unlikely to affect SMEs directly, the bankers’ bonus tax is by far the most memorable measure in the pre-Budget report. Discretionary bonuses of more than £25,000 will be pooled and taxed at 50 per cent before they are paid to individuals – when, of course, they are likely to attract an income tax rate of at least 40 and possibly 50 per cent. Anti-avoidance measures have been introduced ‘with immediate effect’, according to Darling.
The big picture: Public spending is to increase next year by 2.2 per cent in real terms and there are to be no cuts until ‘recovery is secure’. Government debt will continue to rise until 2015, when it will account for 78 per cent of GDP.
