Owner Managed Businesses? Key tax changes ahead....talk to us NOW to plan ahead

George Osborne presented his first Budget on Tuesday 22 June 2010. Owner Managed Businesses need to be aware of some of the key proposals contained within the Budget and plan ahead for these changes. Talk to us now about how this will affect your business and the potential impact on your personal circumstances. Some key proposals:

Reduced corporation tax rate. Small profits rate which generally applies to companies with up to £300,000 of profits is to reduce to 20% from 1 April 2011. The main rate which generally applies to companies with profits of more than £1.5million will reduce from 28% to 27% from 1 April 2011. Further reductions in the main rate are proposed at 1% per year which will mean the main rate will be 24% by 1 April 2014. The effective marginal rate for profits between £300,000 and £1.5 million is expected to be 28.75% from 1 April 2011 (assuming there is no change to the basis of the calculation).
Capital allowances changes from April 2012. The Annual Investment Allowance which provides most businesses with immediate 100% tax relief on the purchase of qualifying plant and machinery is to be reduced from £100,000 to £25,000. Additionally, the rates of writing down allowances per annum on expenditure not relieved by other allowances are to be reduced by 2%.
Entrepreneurs' Relief lifetime limit increased. Subject to a number of conditions, gains on disposals of entrepreneurial businesses by individuals and certain trustees qualify for Entrepreneurs' Relief. The effect of the relief results in qualifying gains being taxed at an effective rate of 10%. There are proposals to increase the lifetime amount of gains that can qualify for this relief from £2million to £5million for gains arising on or after 23 June 2010.
Pension changes. The Labour government had announced its intention to remove higher rate relief on the pension contributions of those with high income, broadly £130,000 or more, from 6 April 2011. Complex anti-forestalling rules apply for the 2009/10 and 2010/11 tax years. The rules that were going to apply from 6 April 2011 are going to be being reviewed via consultation with the possibility that the annual allowance, currently £255,000, will be reduced to a much lower amount, possibly in the region of £30,000 to £45,000.