Owners cheer family business tax delay

Small and medium sized businesses received some good news in the Budget when the government decided to postpone their plans to tackle what they termed as income shifting for a further year.

This so called “family business tax”, announced at the end of 2007 and due to be implemented in April 2008, would have meant a double whammy for affected businesses of an increased administrative burden and increased stress due to uncertainty as to how the rules would be applied in practise.  However the Chancellor confirmed that the new simplified Capital Gains Tax regime, which potentially will almost double the tax payable by entrepreneurs who sell their businesses ,would be implemented, although there would be some relief available in that the first £1mio of lifetime gains from qualifying business sales would be taxed at 10%. Other measures announced in the budget include confirmation of the changes to the capital allowances system, an extension of the small firms loan guarantee scheme and financial assistance for women entrepreneurs.
Regrettably the increases in the rate of corporation tax for small companies, announced in the previous year’s budget, remain in place, with the rate for 2008-2009 increasing to 21% and 2009-2010 to 22%.

Commenting on the budget, Orchard CEO Ash Mehta said that “While there was obviously some good news regarding the family business tax proposals, taxation for small and medium sized businesses remains unnecessarily complicated. What the business community continues to need is a period of stability and certainty to enable it to plan for the future and create the wealth and jobs that will provide real sustainable revenue for the government and the country.”