Spring 2005 Newsletter Content Home Sweet Pension Anything To Declare? Death And Taxes His And Hers Oh, Gross! We Didn't Mean It Agassi Wins Time To Go It Could Be Worse... Trivial Pursuit Re: Mortgages A Marriage Made In... Time's Money Show Business Scam Of The Decade? Gift Aid Vat's Hot! Wait For It A Good Buy? Know Your Articles Rights And Wrongs

Wait For It Last year, Gordon Brown said that small companies were taking advantage of the low tax rates he had himself introduced to an unacceptable extent, so he brought in some rules to balance things up. In fact, it's still better being a small company than a sole trade - just not as much better as it was before April 2004. And the new rules made no difference at all to a company which makes more than £50,000 a year in profit. All that means that many people expect more changes in the Budget this year. Some sort of indication was expected in the Pre-Budget Report in December, but in the event it was a non-event. The Chancellor announced a 'review of small business taxation', but the document published by the Revenue was so vague that it's impossible to predict what they intend to do, or when. The Revenue are supposed to be receiving comments on their document (more detailed than 'it's a bit vague, isn't it?'), and then developing some proposals. If they intend that to be a genuine and serious exercise, it seems unlikely that there will be anything in this year's Budget - there isn't time. Of course, cynics may suspect that there will be something nasty there anyway. We'll keep you posted. But, in the meantime, it seems impossible to recommend any evasive action, because no-one knows where or when the blow will fall. The non-corporate distribution rate was introduced by the Finance Act 2004, and many commentators have suggested that the 2005 Budget could: * increase the NCD rate from 19% to a higher figure; * remove the nil rate band on the first £10,000 of CT profits in some circumstances; * restrict the tax credit on close company dividends; * reintroduce an investment income surcharge; * introduce an extra tax or NIC charge on close company dividends; * do something else that no-one has yet thought of. Of all of these, the first seems the most likely, as it would not involve changing the Government's direction too much. The Revenue's discussion document on small business taxation can be found at www.inlandrevenue.gov.uk/pbr2004/small_companies.pdf, but it does not give a great deal of detail, either of the 'problem' or of the possible solutions.