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Budget 2012 for business and individuals

An invitation from the Chancellor of the Exchequer

The Chancellor opened his Budget for 2012 by stating it was 'unashamedly a budget for businesses. After such a volume of 'leaks' many of us knew what was coming. His constant theme was simplification, especially with the tax system. But do not assume this means it will be easier for businesses or individuals to navigate the tax minefields. It might transpire to be simpler to submit tax returns, but the background tax calculation must still be undertaken. This is where a good local accountant will save a business and individuals money, taxation headaches, and avoidance of future pitfalls.
We our ideally placed to help as he is Chair of the Working Together Group. This is the forum for Tax Professionals and the HMRC Inland Revenue to look at and resolve common taxation problems. It means that he is at the forefront of the latest thinking on taxation issues.
This budget was heralded to create economic stability and growth. The Chancellor was announcing his plans for the future, i.e. 2013 and beyond. Few changes were introduced which came into effect on the day (22nd March). The invitation is for business to think and plan ahead, with your accountant, to ensure the changes and benefits announced are fully implemented.
This is why talking to us now is so important. Buying that new machine or building an extension, and then telling Steve afterwards is the wrong way round. Doing so will probably cause you tax problems and loss of income or cash. Tell him now and then get on with it. Telephone us today on 01395 233178.

Budget tax aspects that might affect you

Corporation tax
The taxation rate announced in 2011 is being improved with a further 1% reduction bringing corporation tax to 24% from 2013. But the small business taxation rate remains at 20%. This makes it sensible for sole traders to speak to us to examine the possibility and advantages of becoming a limited company. With a new tax year about to start it might be the ideal time, today

Capital allowances
Last year these were changed and reduced and there has not been any further alteration to this situation. However there is a considerable taxation difference between replacement and new purchase. The replacement tax allowance rate is 100% whilst new purchase is just 20%, after the first £25,000 which can be claimed, this is down from £100,000. Another reason to consult our specialists before embarking on either project.

Planning the timing of capital purchases becomes very important to ensure that the maximum available tax allowance can be secured. As an example a company with the 30 September year end wishes to buy new plant costing £35,000. If they had bought it in February 2012 they could claim on the full £35,000 but a purchase in June 2012 means a claim of £27,000 (£25,000 +20% of £10,000).

Small Business Rate Relief
This has not been extended so beware of the increase in your rates which will affect your cash flow from October this year when the present arrangement stops.

Personal allowances
A number of changes to Child Benefit were made. Reduction in benefit amounts will be made in £50-60,000+ earning range. If you or any of your staff are included then consult us now to mitigate the effects of these changes.

There are a number of personal allowances available. But the status of your business i.e. sole trader or limited company alters the range of taxation allowances available. One of the advantages of becoming a limited company is the retention of the full personal allowances available. As a sole trader you might lose many of these tax benefits. Remember as a sole trader your tax base will be 20% plus 9% NCI. As a limited company it is just 20% so a saving of 9% with cash flow implications too. Speak to our experts today and learn the whole picture. Telephone 01395 233178

The new threshold is £77,000 with de-registration moved to £75,000.
Allowances on cars
It is really a case of staying in touch with your accountant and watching this space. Further changes are going to be introduced but have not been specified.

Raising finance
The Chancellor announced a new Government loan scheme designed to ease credit. Currently, the bank margin over base rate is high and many companies have difficulty in securing finance. However the new scheme is operated by the same high street banks and will only shave about 1 % of the rate. When you consider raising finance you will need a full set of accounts, cash flow etc. A good accountant geared to small business will produce this and help with the business and financial plan. The advantage is the business may find that with some tweaking, the finance is not required. We have helped many of clients in this way and it could be your turn – now. Speak to him today, perhaps informally – 01395 233178.

Take advantage of the knowledge and expertise
In this article we have provided jus t a few of the budget tax and allowances aspects which affect your business for today and the future. Maximize the information by consulting our specialists now. Prevention is better, quicker and cheaper than searching for a cure later. Remember, the accounts being worked on today, may need to conform to the budget of 2010. The advantage of forward planning after this year's budget will place your business in prime position for the future with no nasty shocks.
By having an informal discussion with Steve, a number of financial pointers will emerge. These can set your business on the path for future success. Not all accountants will provide an informal meeting but this is part of the our service ethos. He will be pleased to tell you about our services and help for business and individuals.

Contact us today on 01395 233178

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