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Dear Clients, friends and colleagues

There was some short term good news in this afternoons mini budget, although there are some unpleaseant tax increases around the corner.

The whole package is funded by a large increase in the UK's national debt which will not start to decline until 2015 – and indeed this may not happen if recovery is slower and/or smaller than he predicts. The economists are already labelling the recovery figures as optimistic, although the financial markets rose initially.

Repayment of the debt is by delayed tax increases and the reversal of some of the temporary measures.

In summary

For businesses

  • No increase in corporation tax – it will stay at 21%
  • VAT to be decreased to 15% for 13 months from December 1st. For VAT registered clients recovering all business input tax this will be more of an andministrative exercise rather than a fiscal advantage. Remember to adjust your VAT table within QuickBooks or Sage, and check your suppliers invoices after December 1st. For smaller clients who are not VAT registered consider making that asset or car purchase in the next 13 months – prices should be genuinely lower.
  • Time to pay: the government are encouraging the spreading of large tax bills – of any sort. If this helps you – please contact us.
  • Need a loan for that asset purchase? A new small business finance scheme for loans over £1,000 is being set up. Details will be available soon.
  • If you have made a loss in this financial year – hurry your books to us as up to £50,000 worth of losses from any business can now be carried back 3 years to generate tax repayments.

For individuals there are:

  • increases in child tax credits, child benefit and xmas bonuses for pensioners. Make sure that your tax credit claim is up to date or ask us for help.
  • Undertakings that banks will take no reposession action for 3 months after a mortgage default. This is to give people time to renegotiate with the bank, – new rescue packages will be forthcoming. We can help you with this process.
  • £5 increase in road taxes for 2009 and then slower than originally timetabled increases for the older or more inefficient cars.

Employers and employees please note in April 2011

  • NIC will increase by 0.5% across the board.
  • there is a new 45% rate of tax for earners above £150,000 (this includes dividends, corporate director/shareholders be aware!)_the personal allowances for those earning £100,000 and above will no longer save tax at 40%.
  • For those earning at the basic rate there will be a small tax saving as the 10% band adjustment is now permanent and slightly increased.

Read the full report >>

Yours sincerely,

Sarah A Smith (Mrs) BSc FCCA FCIE
Chartered Certified Accountant