Total Guide to the Budget 2012

What does the new Budget mean for you?

Upon announcing his Budget for 2012, Chancellor George Osborne described how it backed business and rewarded aspiration.

This is still largely open for debate in a document that is often interpreted in many different ways, but what impact could it have on small businesses?

TGtS Business breaks down the most important aspects of the Budget that could affect you and your business:

1. Small businesses (defined as those with a turnover of £77,000 or less) will be taxed simply on the amount of cash flowing into the business, rather than having to follow the more complex accounting principles applied to larger businesses. However, this does present the increased possibility of tax avoidance, and it remains to be seen whether this will merely be tolerated at small turnover levels.

2. The relaxing of Sunday trading hours during the Olympics means retailers will be able to keep their doors open for longer during an eight-week period from 22^nd July.

3. The Chancellor also discussed the required restructuring of the tax system, in order to make it fair, predictable and simple to understand. However, these moves are still only in the consultation phase and may materialise in future finance bills.

4. The government’s aversion to stamp duty avoidance schemes is illustrated in the introduction of a harsh rate of 15% to apply to properties worth over £2m bought through a company. It is expected that this will generate an extra £0.5bn for HMRC.

5. The cut in the top rate of income tax from 50p to 45p has been widely praised as encouraging entrepreneurialism, and though we will have to wait until April 2013 to see the changes take place, this reduction will be a reward to small business owners who have incomes of £150,000 – of which there are many.

6. The main rate of corporation tax will be reduced to 24% from April, with a further two cuts planned in order to reach a rate of 22% by April 2014. George Osborne claims these reductions will move him closer to the ‘ultimate aim’ of aligning the lower rate of income tax with both small companies and main rates of corporation tax at 20%. Whether these changes take place or not, the question remains whether the ultimate aim of a blanket reduction of corporation tax is fair. Osborne is clearly attempting to encourage large companies to base themselves in Britain and create employment opportunities, but the rate of 20% won’t make it any easier for the small business owners, who often take the biggest risks.

It’s safe to say it was a fairly ‘mixed bag’ for small business owners when the Budget was announced, although with some of the measures not set to be implemented for a while, it is going to be a ‘waiting game’ in many senses.

We want to know how you think the Budget will affect you and your business - what are you apprehensive about? What are you optimistic about?

Post your thoughts below....

This article originally appeard in Business Zone