Budget 2009 and small businesses

Well, you wouldn't call it a Budget for small business, but then most of what might have mattered was in the Pre Budget Report anyway. It was unlikely that the Chancellor would be imaginative about tax, and he wasn't.

We don't know what impact the recession has had on small business, though we might reasonably fear the worst. The small business sector will have suffered from the credit backlash and possibly from a consumer rush to the perceived cheapness of the monster supermarkets. Even more so as big business takes longer to pay its bills so that small business gets squeezed from both ends.

So what is probably the most important thing that has happened for small business is well under way, in that 100,000 businesses have taken advantage of the business support scheme introduced in the Pre Budget Report to defer their tax payments and to anticipate losses.
Anecdotally the word was that this had been very useful, and the numbers seem to confirm that.

The change that may help this time is the extension of the three year loss carry back scheme. As originally announced for 2008/9 it was fairly useless for unincorporated businesses, because it was likely to apply to accounting periods that had run out before the impact of the economic downturn struck. 2009/10 will be far more useful. Again, like the business support scheme, it will help some businesses to survive.

The one year 40% first year allowance will be of interest to some, but will not of course affect the smallest 95%, who are already covered by the Annual Investment Allowance for expenditure up to £50,000 a year.

An increase in fuel duties does not help small business. It particularly does not help logistics and transport businesses and businesses in rural areas. Once again, though, I have to ask why diesel is 10p a litre more than petrol in the UK when it is cheaper on the continent, and that's nothing to do with tax.

And while there are incentives to get people back into work, the cost of keeping people in work ' particularly in this case employers' NIC ' has not been addressed.

Source: www.accountingweb.co.uk




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