2008 budget outline

Below are the key points from this year’s budget, announced last week. For a full run down and details about how it will affect your market see the April issue of BMJ.

• The postponement of the introduction of the controversial ‘income shifting’ rules

• The announcement that owners of small businesses will still be able to dispose of their businesses and pay tax at only 10% on gains of up to £1 million, rather than the proposed increase to 18%.

• Major changes to the capital allowances rules from April 2008 will enable businesses to claim immediate 100% relief on the cost of plant and equipment, up to an annual limit of £50,000.

• Small companies’ corporation tax rate will increase from 20% to 21%, but this is balanced by a reduction in the basic rate of income tax on the salaries or profit shares of business owners from 22% to 20%. Larger businesses will benefit from the reduction in the main rate of corporation tax from 30% to 28% from 1 April 2008.

• For those heavily involved in transport and logistics or those responsible for company cars CO2 emission-related road tax will apply to new cars from 2010. However, there are already capital allowances for business cars including 100% relief for cars in the lowest emission category.

• The Chancellor added an extra 2p per litre to fuel duty and the trend is set to continue, with an extra 0.5p per litre increase in real terms planned for 2010.

• Increases in other taxes such as Landfill Tax, Aggregates Levy and Climate Change Levy will also inevitably filter through into increased costs for most businesses.

The full article, written by Paul Howard, associate director of Chiltern Tax Support for Professionals, will be published in the April issue of BMJ. To subscribe and receive your copy of the merchant industry’s leading business title email subscriptions@fav-house.com