Emergency Budget 2010
Here are the key business measures outlined in Chancellor George Osborne's first Budget, delivered on 22 June 2010.  
 
We asked our members their thoughts on the emergency Budget. 
 

Corporation tax

 
Small firms' corporation tax will be reduced from 21% to 20% from April next year.
 

VAT

 
VAT will increase from 17.5% to 20%, from 4 January 2011. This move, which will directly affect consumers and therefore affects businesses, is preferable to a direct taxation on small businesses.
 
 

Capital Gains Tax

 
The 10% capital gains tax rate for entrepreneurial business activities will be extended from the first £2 million to the first £5 million of qualifying gains made over a lifetime. CGT will rise from 18% to 28% for those with total income and taxable gains above the higher rate threshold.
 
The rise in the Entrepreneurs' Relief threshold should ensure that most small business owners aren't penalised too heavily when they come to sell their companies.
 

National Insurance Contributions

 
The planned increase in National Insurance contributions (NICs) of 1% will come in to force in April 2011. The previous Government had planned a further 1% increase and many Forum members signed the ‘Say No to the NICs increase' petition to voice their opposition to this.
 
The coalition Government has reversed plans for a further increase on employer's contributions, but will impose the 1% increase on employee contributions. The threshold for NICs will be increased by £21 a week above indexation, meaning 650,000 businesses will benefit.
 
A new scheme will also be introduced in which start-ups in targeted areas will get a reduction in their employer National Insurance Contributions (NICs). Further details about this scheme will be announced shortly.
 

Capital Allowances

 

From April 2012, the rate of capital allowances on the general pool of plant and machinery will be reduced from 20% to 18%, and the rate of allowance on the special rate pool of plant and machinery will be reduced from 10% to 8%. The Annual Investment Allowance will be reduced from £100,000 to £25,000 from April 2012. This should target the allowance at small businesses, rather than larger firms.
 

Enterprise Finance Guarantee

 
The Enterprise Finance Guarantee (EFG) Scheme facility for this year is being increased by £200 million to support additional lending of up to £700 million for small businesses until 31 March 2011.
 
A processing target of 20 business days will be introduced for all major lenders participating in the EFG. 
 

Growth Capital Fund

 
A Growth Capital Fund will be created to provide growth capital in the £2-10 million range to fast-growing SMEs currently not served by the market. 
 

Banks

 
The banking industry have also published six binding commitments, which are intended to promote bank lending to small businesses. A bank levy based on banks' balance sheets will be introduced, following consultation, effective from 1 January 2011.
 

Let us know what you think

 
If you're interested in Budget issues then why not join our tax and Budget member panel?