Q: What are the tax implications for a small businesses under the new government?
May 14 2010
Answered by: Clive Lewis Ask a question
It is too early to say what the tax implications will be. The new government has committed to introducing a new budget within 50 days (approximately by the end of June). It then has to get the changes through Parliament, although that may not take too long.
The media suggest that VAT will be increased which may affect your business if you are selling to consumers. If VAT rates do increase and your business is VAT registered, you will have to decide whether to pass the increased VAT on in increased selling prices. It will also mean changing the rate of VAT on sales invoices and/or receipts. For other business it would have cash flow implications because your purchases would include VAT at a higher rate.
The media also suggest that capital gains tax (CGT) will increase, possibly by a substantial amount. So if you are thinking of selling a business or a significant asset it might affect the CGT you have to pay on any gain. Although the government has offered some relief for businesses, as always with tax changes the devil is in the detail.
The other possible change is the rates of corporation tax might be reduced, possibly paid for by removing or reducing allowances against tax which businesses receive such as capital allowances (for capital expenditure on plant and machinery, vans, etc).
In the meantime it would be advisable to talk to your chartered accountant to see if, in your specific case, there is any action you should be taking in anticipation as well as finding out after the Finance Act is published how the proposals will affect you.
Comments