I asked Gareth Davies from KDG to offer his insight into yesterday’s Budget announcement by The Chancellor…
As a small business owner and an Accountant with many small business clients my overall assessment of yesterday’s Budget is that whilst there were a number of eye catching announcements on pensions and savings (and a penny off a pint and a halving of Bingo duty) there was not that much in it for most smaller businesses.
There will no doubt be lots of technical announcements that will come to light over the coming days and weeks however, reasons to be cheerful, but perhaps not delighted, include:
-The introduction of the new £2,000 employment allowance, long pre-announced, will help all businesses with employees. Every business, large and small, is entitled to claim this. In practical terms it means that you will save the first £2,000 of your employer’s National Insurance liability (assuming you pay that much in the first place) in 2014/15 starting with a deduction from the employer’s National Insurance element of your Pay As You Earn deductions payments to HMRC in respect of your April 2014 payroll.
-The personal tax allowance increase for all except the very highest earners, this time is welcome but not life changing. The Chancellor announced yesterday a £500 increase in the personal allowance but it hasn’t been made very clear that this takes effect in April 2015.
-No doubt the increase in the tax relief limit on qualifying capital expenditure to £500,000 will be welcomed by larger businesses, the current limit is already £250,000 so the only businesses that will benefit are those that plan to spend more than that
-There seems to be an interesting cash flow benefit the change to the VAT is dealt with by VAT registered businesses. At first look it would appear that they will not be charged VAT on their bills so less money out of the bank each month or quarter but equally nothing to offset against their VAT bills and a technical adjustment on their VAT returns. I’m sure more will emerge on this later…
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