High hopes for Pre-Budget Report
Article Date: Nov 19 2008
Will the Budget help struggling SMEs?
Changes anticipated in Monday’s Pre-Budget Report (PBR) include cancellation of a planned corporation tax hike and a climbdown on taxing the foreign profits of UK companies.
‘We believe that if tax cuts are introduced they will be carefully targeted, so as to aid primarily low earners and small businesses,’ says Bill Dodwell, tax partner at accountancy firm Deloitte.
Jon Whiting, tax partner at business advisory firm PricewaterhouseCoopers, says the planned increase from 21p to 22p in the pound on corporation tax on profits of less than £300,000 could be cancelled.
He adds, ‘It doesn’t seem a good time to raise tax on smaller companies. I would hope that they’re not going ahead with that.’
Another widely anticipated focus for the PBR is the tax on profits of foreign subsidiaries of UK-headquartered groups. Dodwell points out that ‘a number of UK multinationals have located their headquarters to other countries, as they feared an increase in tax on overseas earnings, or were affected by uncertainty'.
Whiting comments, ‘This has been talked about so much that if nothing comes through or if it’s put in the “too difficult” box, businesses will be really disappointed.’
Finally, Whiting says moves could be made to ease the pain for struggling businesses currently paying tax on last year’s profits.
‘You can’t expect the Treasury to cancel last year’s tax bill, but anything they could do to help businesses offset this year’s losses against last year’s profits without going through the normal lengthy process would be very welcome,’ he concludes.
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