Small company ouch!
Prompted by some miffed small companies, I’ve made a few simple calculations on the . And I can see why some young and growing businesses are expressing their views of Gordon Brown in unprintable language.
Here are three examples. If you are a company that makes a profit of £250,000 per annum but invests next to nothing in general plant and machinery, then you will be £7,500 a year worse off as a result of the increase in the small company tax rate from 19% to 22%.
So far, so painful.
However, if you are the kind of business that invests in new plant and machinery every year, then you’ll benefit from the introduction of a £50,000 annual investment allowance available to all businesses regardless of size and regardless of their legal form. This allowance will mean that 100% of investment in equipment up to a ceiling of £50,000 can be offset against taxable profits.
So if you happen to invest £50,000 per annum, you should end up paying about £1,000 less in tax, as a result of the combination of the new investment allowance and the increase in the tax rate.
But vast numbers of small businesses invest nothing like that amount every year. So let’s assume you invest £25,000 per annum in such kit – which seems to me to be a more realistic figure – than you would be around £3,000 a year worse off following the Budget changes.
To be unfair to the Treasury for a moment, I am ignoring the increase in the enhanced deduction element of the small company Research and Development tax credit from 150% to 175%, because many businesses complain that they find it impossible to claim.
So what do I think about all of this?
Well I can understand the Treasury’s concern about individuals gaming the tax system and incorporating simply to reduce their personal tax and national insurance liability. So there is some logic to the tax hike, as a deterrent against incorporation by individuals who aren’t really running proper businesses.
But genuine discomfort will be caused to perfectly legitimate businesses – which seems an odd thing to do, given the years of rhetoric from Brown that small companies are the lifeblood of a growing economy.
Finally, I am uncomfortable about the Treasury’s attempt to compensate companies by effectively bribing them to invest through enhanced tax breaks on investment. If it does lead to incremental investment, much of that new kit will be unnecessary, white-elephant stuff, the equivalent of gold taps.
Ideally, investment should only be made following a hard-nosed assessment of whether the discounted cash-flow returns likely to be generated by the investment exceed the cost of capital. And a sensibly designed tax system shouldn’t distort that assessment.
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Unlike Barclays, most small businesses are not sufficiently mobile as to be able to up sticks and move to the Netherlands.
For those of us who are that mobile though, it does look increasingly tempting to take our families and businesses in that direction.
Well said Robert. This is a good analysis and shows the damage that could be done by these budget measures.
As a small company we were disappointed not to hear some positive measures to help small firms get access to capital.
I operate a small business and I do not have the need to invest very much. It is total hypocrisy for the chancellor to tell us that he wants to encourage and help small businesses. For the first few years he did, but now he has spent the last few years undoing his own changes. First he actually reduced the Small Companies rate to 19% and introduced a 10% starting rate. He then reduced the starting rate to 0%. He then introduced a minimum rate for dividends, so that they could not benefit from the starting rate. He then scrapped the starting rate, and now he is increasing the main small company’s rate. After all these changes small businesses are no better of than 10 years ago. In actual fact the chancellor hates small businesses as he thinks they do not pay their fair share of taxes. He would rather we all closed down and worked for large corporates so that we all pay the same taxes and we can all conform to what the control freak wants.
Hello,
We are a small technical company. We tried to claim R&D credit, it was a joke. Involved three visits to our local tax office who wanted to know the ins and outs of what we do.... they still did not understand so we backed down. I asked my MP to find out how much the Government actually paid out - the information is not available.
This is definately another kick from a government who have absolutely no idea what its like runnning a small business.
We are Internet based and don't have to be based in the UK - guess what! We are incorporating elsewhere, and we save £36k tax PA.
Its easier than I thought.
But you're judging the impact of the £50K allowance in a single year. Companies have always been able to write off the value of their investments - just that it is currently spread over a number of years (50% in the 1st year, 12.5% in the second, 9.4% in the third). So this new allowance just lets you get the value earlier.
So in present value terms, if you invested £50K in a particular year the new relief saves you less than £2,000 compared to existing capital allowances. Nowhere near offsetting the rise in Corporate Tax.
Absolutely.
I've just set up my own limited company which will sell my services to multiple customers, as an accounts software consultant.
On-going expenditure in plant and machinery will be minimal, so my company will pay more tax purely because it sells services and not goods.
The hike in the small company rate may have been designed to catch illegitimate incorporations, but it's catching legitimate ones as well. And bringing the large company rate down, while the small company rate goes up, only adds insult to injury.
Whoever the next Chancellor is, let him/her come and run a small company for a year, to gain a real understanding of what the small business world is like.
M
There are scores of small businesses which are very very legitimate, like my estate agents.
My estate agents are not nationwide network, they employ only 4 people, but the business is very real business.
Anybody with proper sense will try to improve the climate for small businesses, as small businesses are the real life blood of the nation.
Whoever come up with the idea of increasing the tax burden for small businesses must be a multi-millionaire or one of those whitehall mandarin, who never had to fight for anything in life, had no touch with reality!
Unfortunately, this is what you can expect from this government!
Sorry, Robert but your calculation is still wrong.
Capital tax relief is a cashflow issue. We have always been able to claim 100% against tax, it just used to be over 3 years. So there is no £1,000 gain, only the gain we get from getting that money this year instead of next.
Gain: 4% of £1,000 = £40
In summary:
Gain: £40
Loss: £9,000
I would say that's a bum deal & shows that all Gordon Brown's talk about believing in an entrepreneurial economy is simply hot air. As they say, follow the money - his heart is with big business.
Brown's budget for small businesses is absolutely bonkers. Yes some have incorporated to avoid due tax but most small businesses were not set up explicitly to do that. First he has taken away the £10,000 tax free level and now he is increasing the rate - madness, if there is a genuine desire to encourage us. (My two brothers, both high quality IT graduates, left the UK in the past 5 years because of tax increases and they certainly won't come back.)
R & D Tax credits are meaningless for most companies as the cost of paying advisers who are truly competent and credible (usually large accountancy practices) offsets any monetary gain, plus the internal time and admin. cost of setting up and monitoring the system is extremely time wasting - no wonder very few SME's are using them.
There is already a skills shortage (plumbers, IT proffesionals, etc. I suspect that this will be one more reason for those who can (high earning [and tax paying] educated proffesionals with their own businesses)to consider moving elsewhere in Europe.
Graybo (post #1) makes a very valid point: small businesses are an easy target, as by and large it is much harder for them to relocate in other countries than it is for big businesses. It would certainly be next to impossible for me to relocate my business.
A cynic might also suggest that the difference in the way big and small companies were treated in the budget might have something to do with generous donations (or were they loans?) to Labour party funds by big businesses.
As for the capital allowances, that's a complete red herring as far as most service businesses are concerned. I run a service business, and the fact is that we just don't need high levels of capital investment. Sure, we need to keep our computer systems up to date, and it will be nice to have tax relief on that, but it won't even come close to making up for the 3% tax hike.
As for "years of rhetoric from Brown that small companies are the lifeblood of a growing economy", rhetoric is one thing, but action is quite another. Every action from this government seems to be designed to screw small businesses every which way they can. This latest kick in the teeth is just the latest in a long trend.
Have you also considered the impact on those small businesses who also happen to be in manufacturing of the total abolition of the industrial buildings allowance? This removal will only serve to increase the impact of the increased tax rate.
Small companies in manufacturing are also likely to have employees on below national average incomes for whom the removal of the 10% income tax band will hit hardest.
It would be helpful if you would include the full facts relating to the change. The rate increases only to 20% from FY 2007, then a further 1% in FY 2008 and it is not until we reach April 2009 that we hit 22%.
By not reporting the facts fully you stand accused of the very thing the Chancellor does - not giving everyone the complete picture.
Also what on earth does "gaming the tax system" mean? Please try and use plain english.
Fantastic and yet unsurprising. I work for a "small" business. This just means wages here will continue to fall behind inflation as company running costs increase. We certainly don't spend £50000 on new machinery.
May I ask how a service industry - such as an insurance broker is expected to invest in plant and machinery?
I've already had to cope with substantial extra costs to comply with regulation (giving policyholders information that they don't want) only to see banks ripping off customers by mis-selling products and other brokers / garages only paying lip service.
My gross profit is less than 50p per policy!
It is clear from this budget that Mr Brown is intent on funding his future spending on the money generated through taxes on small business's. And I am still failing to understand how this budget has made the tax system any easier to understand. I would agree with the comment above, this way he will lose out in the end.
Peston here. Several contributors have pointed out that the 100 per cent allowance on investments up to £50,000 is simply an acceleration of existing capital depreciation allowances. I did factor that into my calculations, but should have perhaps made that more explicit in my commentary - and it's true that I am guilty at looking at only one year's cash flow implications rather than looking at the impact over several years. So perhaps I am still guilty of being a bit too kind to the Chancellor and the Treasury.
It is not very long before we will be losing our profits which is gained with our hard work and collaboration due to this unthoughtful budget scheme.
It has got to the point where I am beginning to actually feel persecuted for running a small business in the UK.
IR35, S660 and now this weeks budget have finally encouraged me to look to find an alternative location to base my small, and very profitable IT Consulting company.
Over the past 12 years I have contributed a sizeable amount of money to UK Plc and yet Brown makes me out to be some sort of 'tax dodger'.
Most of the work that I get is picking up the pieces of failed or failing projects run by the Government's favourite consulting firms. I'm sure that they are pleased that another attempt to close the little guys down has taken place.
Every time Brown stands up to talk about the 'flexible knowledge based economy' I feel like throwing the TV out of the window !
If this guy becomes PM, god help us all.
Do what I have done - write to your MP and tell him Brown has lost your vote.
There are 4.3 million small businesses in this country and plenty of marginal constituencies - that might get their attention.
As is evident from the many posts a large no. of small companies do not need to invest £50k per annum in plant and machinery - so this is a ruse to balance the tax hike. Let us not forget the almost 30% increase in Employers NI during this Govt. More importantly, no serious attempt has been made to simplify the tax system. The political sanctity of the basic rate of income tax has resulted in a complicated and expensive taxation regime.
I assume the front pages of the Mirror and Sun were Gordon's reward for the 2% cut in corporation tax. Depressing!
Some very good comments.
Modern small companies often commission other companies as sub-contractors for services or products. It is not necessarily sensible to invest in plant or machinery when sub-contracting is more efficient. By taking this more efficient route the small company is being penalised and at the same time offered a potential tax bribe to become a less efficient company
I think the key word in your analysis is "rhetoric."
Gordon may say nice things about small business and entrepreneurs, but he does very little to actually help them.
Gordon is a big business and big government man.....but of course, he can't say that; but his actions speak a lot louder than his words.
I've never quite understood why political commentators spend so much time analysing what politicians say, and less time on what they actually do.
It's akin to a business analyst judging companies solely on the quality of their advertising.
I suppose I should be slightly concerned about this extra tax on small businesses, but I only invest in big ones, and there are too many (so called) small companies fiddling the system, so in the balance I couldn't give a hoot about them.
I hope Gordon spends some of the money on getting rid of litter. These tin-pot
sweet shops and fast food joints etc. create so much of it, and the extra few grand might help clean up thier act.
I'm more concerned about dropping the 10% band. This hits normal people, not just the toffs with thier own firms.
Has he finally lost the plot. Small business is the heart of the UK and Brown is attempting to bleed it dry. With the increases in all forms of tax (including ENI) I can see I.T. companies relocating, the service industry falling on its knees and the manufacturing industry, well thats sector is already there. When will politicians use the things on the side of their heads, they were designed to listen but it seems a political gene abnorminalty renders them defective.
I am an individual trading as a Limited Company and I object to the implication that I am not running a "proper business".
In the world of design and digital media in which I work, a flexible workforce is a key part of the strategy for many medium sized companies. Looking forward, I see this way of operating as a vital part of many other successful business models.
Therefore it makes sense to support individuals who take risks in order to provide that flexibility. Create a separate tax bracket for us if needs be, but don't discourage us too much.
Steve Jones thinks that people who have their own firm are 'toffs' who are not normal people. Unbelievable !
The fact that I came from a council estate, to working class parents, had to go to work at 17 because I never had the 'financial' opportunity to go to university, makes me a 'toff' does it ? How about a desire to succeed on my own, to be responsible to create wealth ? Does that make me a 'toff' ?
You, Sir, are sadly misguided. Maybe you would like to apologise ?
You've said yourself that you 'only invest in big ones'....because all the small ones fiddle the system.
Here is a challenge for you Mr Jones. Take a closer look at some of the 'fiddles' that some of the top 100 FTSE companies employ.
Let's see if you have the guts to respond ?
> Does that make me a 'toff' ? .. Maybe
> you would like to apologise ?
Yuh, sorry m'lud, won't happen agin. I lerned me lesson ...
On a serious note, we have to stop these
micro-businesses from fiddling their books.
Right now, good ones are being penalised
along with the majority of VAT fiddlers,
National Insurance twisters and carousel
crooks. All get it in the neck because we
can't tell a few good guys from the
crowd of artful dodgers out there.
Steve
Where will the next generation of big businesses come from?
i do not understand why people who are self employed are complaining - we are not affected by the increase in small company tax as we do not pay it - we pay income tax and NICs - and we have just had our tax rate cut by 2p. this looks to me like those of us who are self-employed are doing okay, and it is just the contractors who are using a limited company to avoid paying their NICs who are losing. Good thing too.
Robert,
Here is one for you. You did well last week on the R4 Today show, and your mixture of exuberance, informed comment and enthusiasm for this line of work is so apparent that you _will_ do very well in this. I particularly liked your cadence - you are a natural.
But on the radio, you have to act humble. Let the show-boss cut you off; listen harder for the cues.
It's just a tip - I might be wrong. I don't want to cramp your style. I mean it, you're doing very well.
I'll continue with my anti-business grumpiness in the hope that it might stimulate comment.
Roll on the revolution!
Steve
I'm afraid Steve Jones and Chris just see the Chancellors paranoia about one man bands and not the real truth. The facts are that Small and Medium sized businesses account for 51% of turnover and 55% of employment (DTI figures). We are at the small end (4 employees). Like the majority of small companies we do not "fiddle" the system - we pay full NI and PAYE on all salaries (including Directors) and take no dividends (We are trying to build a bsuiness after all). We do not even object to paying tax as generally that means we are generating profits and growing the business. What we do object to is ill-thought out increases that act as a disincentive to business and restrict our growth prospects. This budget does nothing for us (I agree with the previous comments about Capital allowances being primarily a cash flow issue and although we do claim - with difficulty - R&D allowances, the small increase here does not offset the significant rate increase).
The bottom line is that Gordon Brown's obsession with the possibilities of some one man bands paying slightly less tax than if on PAYE has resulted over the last few years in him undoing all the good work on tax incentives for small business and now discouraging entrepeneurship. This ultimately will affect jobs and the UK's competitive position in the world. As a life long labour supporter I am, at last, highly disallusioned by this budget in particular and the new labour project in general.
More important to the discussion is why has the Chancellor felt that politically he could raise Small Company taxes?
One conclusion must be that small companies and there are a lot of them, have no collective bargaining power politically although they employ just under 'half' of the electorate.
He has lowered general taxation and large corporation taxes but has partly funded both by exploiting the poorly paid and their less wealthy employers.
The message to the worker on a lower income is work more hours to compensate and to their employer(s), grow your company or suffer higher taxes.
Would you want to work more hours if you could and would the bank allow you to grow your business? The choices seem to be economic slavery and over extended risk. This represents the 'New' in Labour politics.
I run a small web design firm. We were due to expand in the next few months and take on some more staff.
In light of the new budget we are having to rethink our strategy over the forthcoming year. It is doubtful we will be able to do what we want when we want. Like many small businesses we have struggled to get where we are, faced brick walls with the banks and had to prove ourselves at every step of the way. Our margins are low as we have to remain competetive. We've had little to no help from our local business link and chamber of commerce. From our experience there is little help for new business and innovation. I ask myself sometimes why I bother - the answer because it's the ONLY way I can secure an income for my family, and it scares me.
Well done Mr. Brown - another kick in the teeth for the small business.
Hi,
I just wanted to add a reply to Steve Jones.
The Inland Revenue revue of 2002 made it clear that the majority of lost tax was medium to large business using "loopholes" - a lot of which are now closed. So it's hardly surprising that the govmnt turns its attention to small business.
I asked my MP to find out what figures Brown had based the 2% increase on. Lets see what the response is. I hope the shadow chancellor is reading these posts.
Steve, finally,micro businesses like those you quote generally have a turnover of less than £250k, employ less than 5 people with takehome less than £20k. Even if they fiddle the loss is miniscule, and with the tax inspector regime of today I doubt if less than 5% make it.
Fundamentally there should be no difference between the different ways of operating a business. At the moment it is 11% cheaper to operate as a company than it is to operate as a sole trader or partnership (22% + 8% NICs vs. 19%). Why should that be? There is no advantage to society from offering this tax break to companies. So why should everybody else shoulder the burden?
The chancellor plans to shrink that advantage to 6% (20% tax + 8% NI for a sole trader/partnership vs. 22% for an incorporated form).
For those operating as a company, I'm afraid it is for you to justify why you are worth 6% extra in your pocket over the self employed and 9% over simple employees. Why is capital invested in a corporate form that much better for the country than capital invested in other forms?
Additionally the tax differential between companies and other forms is distorting the forms that people take. For example, the vast majority of professional service businesses would work more effectively if they were limited liability partnerships rather than companies .
The rewards of working for your own business are in the extra you can charge for your service, or the profit you can make off the back of organising the efforts of others. You shouldn't be running a business on the back of tax breaks.
This government in general and chancellor in particular has made a speciality of saying one thing and doing something that encourages the opposite. Here is just another example. Companies, unlike people, do not have votes and so he can for a while get away with what he likes. It is easy to pass laws that discourage enterprise. However nobody can pass a law forcing companies or individuals to invest and employ.
I find Steve Jones' comments most objectionable. He accuses the majority of small business owners of being crooks. When challanged, he pretends to appologise and then continues his libel.
Steve, I was born in a council house in South London a long time ago. I have worked long hours for many years (since I was 11 when I went to school, passed the 11-plus and also had two jobs, so that my family could send me to a Grammar School). I continue to work hard, despite EU attempts to make that illegal.
But, I never fiddle the taxman. I don't pay suppliers late. I don't overcharge clients and I especially don't underpay the people who work with me. I also don't pollute the environment nor endanger or inconvenience anyone else.
Am I unusual? No! There a huge number (the majority) of small business owners just like me.
Perhaps it's your own devious nature at work here, Steve?
I do feel very let down by Gordon Brown, but what's new there?
WE HAD ENOUGH THREE YEARS AGO,CLOSED OUR BUSINESS, WHICH EEMPLOYED SIXTEEN PEOPLE. ONE LESS SMALL BUSINESS TO SUPPORT THE SYSTEM
Chris, with reference to your view that legitimate small businesses are usually sole traders and any that are limited companies are on the fiddle is complete nonsense. Any small business that expands to a certain level should be incorporated to benefit from limited liability and allow profits to be reinvested into the business rather than all taxed as personal income. In very rough terms, half the wealth of the country is generated by small businesses, they are certainly not a bad thing.
As a service based small business with an increasing tax burden, exactly where is the incentive to keep going?
I could fold the business, go unemployed and be better off for it!
For many years now, the creation of a temporary / flexible workforce has lead to a huge growth in micro businesses especially in the service sector. There were a number of people who were "bums on seats", people who wanted the security of being always engaged in the same role, but now contracted on more favourable terms including tax terms. The introduction of the failed and impossible to administer tax legislation via IR35, has made Mr Brown realise that more primary legislation is not what was required. To obtain what he no doubt sees as a the governments fair share of tax, he is simply flexing the long established tax mechanism in place.
In all of this he cannot see the harm he is doing to people who are truly risk takers and intend to be in business on their own account. He doesn't understand, he never will. Fortunately for him, when he is thrown out of a job after the next election as a result of his actions now, he will have a feather bed to land on. A job in the City, book deal etc....
Running a small business that is increasing its employment of staff and outside contractors every year, I am dismayed at having to pay yet more tax - between our company and ourselves, my wife and I are well over £100k pa to Gordon Brown.
This on top of having year-on-year to put more of my time into complying with ever more pointless legislation ( have a look at the whole 148 pages to help you assess your fire risks).
My recommendation to anyone wanting to start their own business. Don't. Get yourself a well paid job in the public sector where you will be feather-bedded by Gordon, held responsible for nothing and will bag a guaranteed huge pension when you've had enough.
Ive got a limited company and am the only person being paid. I have a massive variation on what I might earn each year, and yes I pay my self the minimum wage to allow for a NIC payment and the rest in a dividend. But people have to understand I was dumped out or work after twenty years full time employment and in my forties it was either employ myself or take the high road. I dont want to be a drain on the country so that is why I drive my business forward. Now then - I WOULD like to employ other people and bring myself into a proper wage structure HOWEVER these changes simply perpetuate the hand to mouth existence of many small ltd companys. If I was allowed to keep profits in the company without corporation tax being applied that would be the single biggest factor in allowing a single person company to build up a pot of money to allow them to GO FOR IT and break out into a multi person business.
The Chancellor's people need to get out more to find out about the new businesses that will help drive the economy forward. Many will be small and nimble knowledge and services driven businesses which require very little plant and machinery. So this additional tax acts as a direct disincentive to start or remain in the UK with the value of their success going elsewhere.
Thank you, thank you, thank you.
This chancellor is an idiot. The degree of regulatory burden on small companies in the UK is simply stunning and exhausting. There are no breaks from the constant drip drip of added burden and no sympathy for the smallest step out of line.
To add to the pain with this rise is punishing and unnecessary. If he and his tax collectors are incapable of distinguishing the genuine from the fake with small companies, then find a different way. Do not punish everyone.
A haven for entrepreneurship? A country trying to inspire new businesses to innovate and grow. Total and utter rubbish. Words with zero substance.
Mr Brown I am now 100% convinced where my vote will now go. You have no heart and are 100% out of touch with how hard small businesses are to start and encourage. Mr Cameron gets my vote if for no other reason that you patently do not deserve it.
Upset, disillusioned, working 80 hours a week with no thanks and no respite, and no help from the government that should be doing everything to help me.
Even worse, as if you even deserve my money. All you do is throw 70% of it down the drain.
Andrew Watson
ip Value Added
ps some great comments above from genuine hard working entrepeneurs trying to make small businesses work. But will Gordon Brown listen? You're kidding...at least we only have him for a short time. Poisonous idiot.
As an owner of a small business (less than £100,000 per annum turnover) I find nothing surprising in the latest budget.
For years the Government and Mr Brown in particular have talked about creating an enterprise culture to rival the States, and yet their very actions (or usually lack of them) either keep the status quo or tighten the regulatory and fiscal burden on entrepreneurs.
I am a member of the FSB, Federation of Small Businesses which boasts a significant membership. Perhaps it is time for the FSB and other representative organisations to prove their worth and justify their own rhetoric and annual fee?
Couldn't agree more with most of the sentiments on here. Myself and three others run a service company employing over 20 staff and turning over 10m, and yet the tax and red tape burden is ridiculous. We're not fat cats.. we staked our own money to set the business up and have been providing great service to customers for over 3 years. Prior to that I was self-employed through a 'shell-co' but it was the only way I was allowed to invoice my clients for the work I did for them.
The budget has done nothing to encourage enterprise and to enable growth of businesses. Yes we have more flexible workforce rules than France (thank god!) but we need a more flexible tax structure to encourage entrprise. As to the capital investment allowances..bit of a joke really..I reckon in this half year we've probably spend no more than 5k, as we've got working IT kit and aren't going to rush to put more money in bill's pockets.. aka vista tax
I think it's time we asked what the purpose of Corporation Tax is.
There is an efficient way to tax individuals when they take income out of corporations in the form of dividends, salaries and bonuses. What logic is there in taxing company profits? As long as the profits stay within the company it's no business of the government to tax those profits as they may well be needed for other purposes. All the distortions in behaviour caused by the tax system would also go away.
R and D tax credits are not only difficult to claim, they are also 'capped' by the amount of PAYE and NIC an SME pays. So if you're spending £100,000 on R and D with 5 people in the company, then you get a notional £175,000 allowance. But you probably only pay £50,000 in PAYE, so that's all you actually can claim. Raising the percentages is a bit like offering a new, improved all-you-can-eat menu, but only giving out a slightly larger plate...
If your business is based on knowledge or services, as mine is, you're unlikely to need to invest in capital items on such a scale as to recoup the lost tax. As Robert said, tax systems should not influence hard-nosed investment decisions.
If there is a problem with people setting up companies to avoid some tax, isn't the answer to align the basic and higher rate income tax bands with the corporation tax rates?
I was working as a small business and this budget was the last straw, along with council tax to rise in the near future. I'm moving my business abroad and will save on tax in the next year which will cover my moving cost. job losses,not my fault,Sorry I tried.
I w'd encourage anyone who wants to move out.....Its worth it. you won't know untill you try. Let Gordon play with himself.
Fatcats of government playing with my tax money......well no more.
It's important to remember that the amount of tax paid will also affect the willingness of the company to spend in other ways. As an example, increasing wages becomes comparatively less costly due to the differential tax reduction on the other side of the equation.
It also means that it is more likely that very small businesses will pay what are really wages as wages and not as dividends.
Overall, I had hoped to see a starting rate of 0% up to at least a grand - just to avoid the additional administrative burden for companies failing to even scrape that little together at the end of the year.
I am a small business, because I couldn't find an employer who wanted my skills and experience full time and was willing to pay the reasonable rate I wanted. Now that the market has forced me to be a small business, finding my own individual clients, I find the Chancellor thinks I am doing this to avoid paying tax. Well let me tell him, let him have the uncertainty of wondering were next month's cheque is coming from, then he can judge whether we do this for the supposed tax breaks.
Interesting reading the above comments. We had a small business in the UK for 18 years and found it incredibly difficult to survive with all the taxes. We had problems with debtors and all the big players took their share leaving the poor sods who had done the work with nothing. In 2005 we had a gutful of the red tape and 'can't do' attitude and relocated to New Zealand where things are far easier for businesses by far. Am I glad we did as it seems things are just getting harder and harder in the UK. Join the sensible people and vote with your feet then the current government may take notice. Somehow though I doubt it!
I've seen a couple of articles recently about "How to beat Gordon". My preference is with a stick... ;-(
Hi,
Does anyone know anything about the ins and outs of incorporating in another country?
Is it possible to still work in the UK or do you have to move?
I ask because across the water in Ireland corporation tax is 12.5% and only 10% for manufacturing businesses that qualify.
Thats probably why *little* companies like Google do most of their business in London, but their european business is actually incorporated in Ireland.
Makes you think?
I'm sorry but I'm getting so angry about Mr Brown's policies of underhand statements, in one hand - more out the other taxing, aren't we doing well you poor old soles type of speech that the first chance I get, I'm out of here. I run a small company that is just becoming too much effort for too little reward (for me) and too high a reward for Brown's pockets. If I had a great feeling about the state of this country I may be persuaded otherwise but . . .
"So there is some logic to the tax hike, as a deterrent against incorporation by individuals who aren’t really running proper businesses."
This is a myth pedalled by the Socialist running the Treasury. Any person who provides their services through a personal service company is bearing the risk of employing themselves. The end client offers no benefits: no paid holidays, no sick leave, no maternity leave, no job security. The owner of the personal service company has to pay for all of these through the income that their contract generates. Whether Gordon Brown likes it or not, that is a fact.
It is high-time that these tax-and-spend politicians, who have nestled up to big business in the same way that Chinese communists have, are kicked where it hurts - in the ballot box.
Brown has gone barmy - or barmier than usual.
Small businesses collect a lot for the government in VAT. Whatever some very small business save on their tax/NI, they more than compensate for in VAT.
Small companies employ 56% of the workforce (or so I have seen quoted on the news) - the latest budget will mean job cuts and more people on the dole. How does that help the economy?
The man is a lunatic.