One of the main themes of the recent Budget was to support businesses, thereby providing jobs and growth for the economy. The Chancellor said he wanted to make the UK ‘the best place to start, finance and grow a business’. The Government are set to help small business by reducing regulation and offering several incentives to help investment.
Corporation tax for small businesses is set to drop to 20% from 21% from 1st April with a fall of 2% for larger companies. For the self employed, taxes are set to rise as National Insurance will rise by 1% to 9%, giving a combined rate of tax (NI and income tax) of 29% for the basic rate and 42% for the higher rate. Employees tax will also rise – up 1% – giving a combined rate of 32% basic and 42% higher rate. Employers NI rises to 13.8% from April 2011.
A proposal to combine taxes on income (NI and income tax), making filing your tax return far less confusing, is under serious consideration but no action has been taken yet.
The Chancellor made the first rise in approved mileage for quite a number of years. This will benefit people who use their own cars for work purposes and rises from 40p a mile to 45p. This will also benefit sole traders, landlords and employees claiming a mileage rate. The news was not so good for company cars with tariffs going up 2% from April and another 1% from April 2012.