Corporation tax
The Government announced that the main rate of corporation tax will be reduced to 21 % from April 2014. This is an addition to the one per cent reduction already announced. As previously announced, the main rate of corporation tax will reduce to 23 % from 24 % on 1 April 2013, with the Small Profit rate remaining at 20 %
Capital allowances
From 1 January 2013, the Annual Investment Allowance (AIA) will increase ten-fold from £25,000 to £250,000 for two years, in a measure principally designed to encourage and support investment by small- and medium sized businesses in plant and machinery.
Taxation of controlling persons
The Government has decided not to pursue the proposal to tax, at source, those who meet the definition of a ‘controlling person’. It is believed that the new approach adopted by HM Revenue & Customs and the existing measures for tackling IR35 are sufficient to avoid the loss of tax revenue through disguised employment. The legislation will be strengthened to ensure there is no doubt that the rules apply to office holders.
Small Business Rate Relief and property rates
The temporary doubling of the Small Business Rate Relief scheme has been extended until April 2014. It is estimated that over 500,000 businesses will benefit from this extension. Subject to state aid approval, an exemption from empty property rates will be available for 18 months on all newly-built commercial property that are completed between 1 October 2013 and 30 September 2016.
Cash basis of accounting
The Autumn Statement confirmed that the new cash basis for small, unincorporated businesses with receipts of up to £77,000
to calculate their tax will be introduced as planned from April 2013. The use of flat rates to calculate some expenses will also be
introduced.
Employee share ownership
Following a recent consultation on providing shares to employees in return for giving up employment rights, the Government will go ahead with the proposals, as planned from 6 April 2013. Amendments to the original plans are being considered, which include the first £2,000 of shares received under the new status being free of income tax and national insurance.
Company cars and vans
From 2013/14, there will be further tax increases for some company car drivers as the car fuel benefit charge multiplier will see
another increase from £20,200 to £21,100. The van fuel benefit charge will also increase from £550 to £564.
Funding for business
The Government has announced further support for UK businesses by seeking to improve access to finance. Several schemes
will be established to promote trade and investment, which include a scheme providing up to £1.5 billion of loans for the purchase of UK exports when there is no other suitable finance available. The scheme is intended to provide UK firms with greater confidence to bid for export contracts knowing that finance will be available.
Business Bank
In September 2012, it was announced that the Government would create a Business Bank. This bank will have £1 billion of additional capital to stimulate the private sector market for long-term capital and address structural gaps in the supply of finance to small- and medium-sized companies. It is reported that the Business Bank will be operational from spring 2013, with the institution becoming fully operational in autumn 2014. Further announcements are expected before the end of December 2012.
Business Growth Fund Investment
It has long been considered that banks are not doing enough to help small- and mediumsized enterprises. The £2.5 billion Business Growth Fund (introduced by Barclays, HSBC, Royal Bank of Scotland and Lloyds TSB to invest in small business equity) is budgeting to substantially increase its level of investment to £200 million in 2013.
Start-up loans
The Government will provide £72 million of follow-on funding for start-up loans.
Other business measures
From next year, the Bank Levy will be increased to 0.130 %
