What Should a Small Business Expect from the Budget 2011?

What Should a Small Business Expect from the Budget 2011?

The aim of the coalition government is to create an environment in the UK favourable for the development of existing businesses and attraction of start-up companies. At the same time, the government aims at developing of the most mature tax system among the countries of G20. The idea is to achieve a new model of balanced and stable growth with help of a fairly competitive tax system.

Some of the provisions in the new budget affect small businesses. The most significant of them are listed below:

    • Corporation tax will amount to 26% starting from April 2011 which completes another 1% cut, by 2014 corporation tax is expected to be 23%
      rate relief holiday for small business enterprises is extended by one year which starts on October 1, 2011
    • Micro-businesses and start-up companies fall within a moratorium that exempts them from new domestic regulation from April 1, 2011, the duration of the moratorium being 3 years
    • 21 Enterprise Zones across England will enjoy simplified planning rules and tax breaks for enterprises; as of now 11 zones are determined and 10 more will be chosen based on bids of local areas

  • Office of Tax Simplification recommended a number of measures that are aimed at simplifying the current tax system. It includes arrangements for integration of incme tax and national insurance contributions. At the same time 43 tax reliefs are expected to be scrapped
  • £250 million will be allocated to a special programme that is supposed to assist 10,000 Englishmen in purchasing homes for the first time. The programme includes a 20% of an equity investment towards the deposit on house. Besides, a reform is introduced relating to the stamp duty land tax with regard to ‘wholesale’ purchases of housing property
  • Additional apprenticeships and work placements for young people will be created to encourage new talent’s enthusiasm
  • Starting 6pm on March 23, fuel duty will be 1 penny per litre less in an attempt to create fair prices for fuel for the current and the next years
  • In 2011/12 the Approved Mileage Allowance Payments rate increases up to 45p
  • Personal allowance increase to £8,105 in 2012/13
  • Additional measures to handle various attempts of tax avoidance
  • A number of changes in respect to non-domiciled individuals’ taxation have been introduced. These measures include an increase of the annual charge from £30,000 up to to £50,000 for individuals who have residence in the UK for over 12 years, exemption from the tax on income that has been remitted for commercial investment in UK enterprises, as well as an introduction of a statutory residence test
  • Inheritance tax rate can be reduced by one-tenth in cases when there has been a donation to charity in the amount of at least one tenth of person’s net estate; additionally charities will not have to fill up declarations for Gift Aid in form of small donations
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  1. Thanks Tina for the information on quarterly tax payments! It’s a double-edge sword as a small business owner to actually owe taxes last year started paying quarterly this year. That means my business is successful, right.

  2. I think we are all ready for some positive changes to occur. Personally, I can say that I am now thoroughly done with the economic situation and no longer choose to live inside the box that others try to get us in. I say that this too shall pass and we can only go in one direction now and that is up!

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