As usual, there is both good and bad news for small businesses in this Report.
The first bad news is that VAT goes back up to 17.5% on January 1st. The only concession because of the date is that any business that is still open at midnight on New Year’s Eve will be exempt from the change up to 6am, or until they close if it’s before then. But everyone will be liable to cough up 17.5% of relevant income to HRMC after that time. You’ll have to add 2.5% to prices or take a hit.
The bad news on National Insurance contributions doesn’t kick in until 2011, but you need to factor this in to your planning. An extra 1% on the wage bill each month from April 2011 may mean shelving planned projects and not taking on extra staff.
There are a few rays of sunshine, though. A feared excess of public spending cuts is not in the pipeline yet.
Corporation tax rate will remain at 21% for another year. And you can continue to arrange deferments of some tax payments under HMRC’s Business Payment Support Service. The continuation of this scheme seems to be open ended at the moment.
The relief from business rates for certain empty property will also continue for the next year. Any business in the low carbon market will have clear tax advantages.
Indirectly, the roll out of high-speed broadband, especially in the currently poorly provided areas, will also make it easier for many SMEs to do business.
If you would like further information about how the Pre-Budget Report affects your business, please contact us.