Pre-Budget Report November 2008
Updated December 2008
Business Losses
As businesses can now claim up to £50,000 per year for certain plant and equipment purchases, and as we are now in the grip of recession, it is likely that many small and medium sized businesses will be in a tax loss situation for 2008/09.
As part of their package of measures to help small businesses, HMRC have extended the present system of loss relief carry back for a temporary period. For the self-employed any losses agreed for 2008/09 can be carried back and set against trading profits of the previous 3 years. For companies the relevant period is accounting periods ending in the year to 23 November 2009.
Company Cars
The pre-budget report confirmed the change April next year to pegging tax allowances for car purchases to the vehicle’s CO2 output. Also the present system where businesses are allowed to write off any difference between the tax written down value and the proceeds of cars when sold, as a balancing allowance, no longer apply. If you need to change your company car it may be prudent to do so before 5 April 2009, especially if you are buying a high CO2 rated vehicle.
Corporation Tax for small companies
The planned rise of a further 1 per cent in the small company rate of corporation tax has been deferred from 1 April 2009 to 1 April 2010.
Income Shifting
The proposed legislation to curb the apparent shifting of income from one individual to another (usually between husband and wife), to save tax, has been deferred, perhaps permanently. This is good news!
Business Payment Support Service
Finally, if your business is profitable, but struggling with cash flow issues, HMRC are now offering to help out. They are willing and directed to grant affected businesses longer periods to settle their PAYE, business tax and VAT. The key is to call them and discuss terms as soon as a problem becomes evident.