How will the Budget 2008 affect your business?

The Chancellor gave his Budget speech on 12 March 2008. You can read the report and further information on the HM Treasury website. The main points of interest for businesses are as follows:

General economic outlook

• GDP growth in 2008 predicted to be between 1.75 and 2.25 per cent.
• An inflation target of 2 per cent.

Taxes, returns & payroll

• Confirmed reduction in the main rate of corporation tax from 30 to 28 per cent and an increase in the small companies' rate from 20 to 21 per cent from 1 April 2008.
• Confirmation of the removal of the 10 per cent starting rate for income tax so that, from 2008/09, there are only two bands - 20 and 40 per cent - for earned income. The 20 per cent rate will apply to taxable income up to £36,000, the 40 per rate will apply to taxable income of £36,001 and above.
• A range of tax incentives to encourage businesses to use fuel-efficient company cars.
• An increase in the VAT registration threshold from £64,000 to £67,000 from 1 April 2008.
• The launch of a consultation on collecting Class 2 and 4 National Insurance contributions from the self-employed.
• Confirmation on changes to Capital Gains Tax (CGT), including the increase in the tax-free annual exempt amount from £9,200 to £9,600 for the 2008/09 tax year.
• Introduction of entrepreneur's relief for CGT - 10 per cent for the first £1 million of lifetime gains on business assets.
• Powers for HM Revenue and Customs to waive charges for those who failed to pay tax on time owing to natural disasters such as flooding.
• The announcement of a wide range of simplification measures for business taxation.
• An increase in climate change levy rates in line with inflation.
• An increase in the aggregates levy from £1.95 to £2.00 per tonne in April 2009.
• A freeze in the lower landfill tax rate of £2.50 per tonne in 2009/10.
• A package of changes around capital allowances, including the new annual investment allowance of £50,000.
• An extensive package of changes affecting residence and domicile rules and the remittance basis.

Finance and grants

• A temporary 20 per cent increase in the funds available under the small firms loan guarantee scheme.
• A capital fund of £12.5 million to encourage more women to go into business.
• An increase in the investor limit of the enterprise investment scheme from £400,000 to £500,000.
• Support for mezzanine finance provision through additional enterprise capital funds.

Employing people

• Expansion and improvement of Train to Gain.
• Skills Accounts to be launched by 2010.
• £60 million extra funding for adult skills.

Environment & efficiency

• An ambition for all new non-domestic buildings to be zero-carbon rated from 2019.

Grow your business

• Free trial periods for all suppliers newly registered with Supply2Gov to help small and medium-sized companies win a greater share of public-sector contracts.

International trade

• Introduction from 2010 of online system to help recovery of overseas VAT for UK businesses.
• Reduction of Intrastat coverage requirement to 95 per cent.