Pre-Budget Report 2009
Last week, the Chancellor, Alistair Darling, announced the last Pre-Budget Report of this Parliament. In it he set out plans to promote economic growth in the next four years, should Labour stay in power. Read on to find out how the measures will affect your business now and in the future. 
 
Whilst measures such as the extension of the Enterprise Finance Guarantee and freeze on corporation tax are welcome changes, the increase in National Insurance could prove a disincentive to employment at a time when the Government should be focusing more on growth.  
 
National Insurance Contributions
 
In a move condemned by the FPB, the Chancellor announced a 0.5 pence increase to employer, employee and self-employed rates of National Insurance from April 2011. This increase is additional to the 0.5 pence increase previously announced in 2008. The Chancellor also raised the starting point from which National Insurance is payable, meaning those earning under £20,000 will not pay more as a result of the increases.
 
Corporation Tax
 
The planned rise in the small companies' rate of Corporation Tax from 21% to 22% due on 1 April 2010 has been deferred for one year, meaning the rate for small businesses will be unchanged in 2010. The deferral is a welcome relief, but we had previously asked the Government to go further and reduce the small companies' rate to 20%.
 
Extension to finance schemes
 
The Enterprise Finance Guarantee (EFG) scheme will be extended for 12 months from April 2010, which should make an additional £500m of credit available to small and medium-sized businesses. 
 
We've welcomed this move, but would like the terms of the EFG to be under regular review to ensure the companies that need it can access the funding. For more information on eligibility and how to apply for the EFG scheme, click here.
 
The Chancellor also announced that the Time to Pay scheme to help businesses spread their tax payments will be extended ‘for as long as it is needed'. 
 
Growth Capital Fund
 
A Growth Capital Fund of £500m will be created to invest in small businesses, seeking between £2 million and £10 million, for whom traditional bank finance is either inappropriate or unavailable. The Government is currently in the process of securing contributions to the fund from major banks and will announce full details of the scheme shortly.  We'll update you on availability as soon as more information becomes available.
 
VAT
 
VAT will return to 17.5 per cent on 1 January 2010. For businesses who will be open past midnight on 31st December (clubs, pubs, restaurants), there will be a few hours grace period given for simplification purposes. For more information on how and when to apply the new rate, click here.
 
Empty property rate relief
 
Empty property rate relief is to be extended. For 2010/2011 empty commercial properties with a rateable value below £18,000 will be exempt from business rates. 
 
Apprenticeships and training
 
Every 18-24 year old will be guaranteed work or training after being out of work for six months. The Chancellor announced financial support for up to 10,000 undergraduates from low-income backgrounds to take up short-term apprenticeships in industry and business.
 
Reduced taxation on patents
 
In a move to encourage innovation, the Chancellor announced a 10p corporation tax rate on income arising from UK held patents from April 2013. We will provide further information on this as it is released.
 
Research and Development (R&D) Relief
 
R&D Relief for Corporation Tax is being extended. From the accounting period ending on or after 9 December 2009, you won't be required to own the intellectual property derived from that R&D to be eligible for the Relief. For more information on R&D Relief, click here.
 
Environment
 
The PBR introduced a number of environmental changes. The discount from the climate change levy which applies only to energy intensive sectors is to be reduced from 80% to 65% meaning a rise in the cost of energy bills for those affected. The Government is to support at least £160m of public and private investment in low carbon projects. 
 
If you have any queries about how these changes will affect your business, please call our member helpline on 0845 130 1722.