A number of updates to the Chancellor of the Exchequer’s 2011 Autumn Statement should make interesting reading to any practice principals who keep a close eye on their finances.
Gordon Brown’s dream of Compulsory Employer Pensions comes true for bigger businesses from 2013.
Ultimately, every business in the UK will be obliged to make payments into their employees’ pensions, but smaller companies of less than 50 employees have until May 2015 to join the system.
The annual increase in contributions from 1% to 3% may be deferred, however, once complete details of this new business tax are made public.
Following years of increases for income tax, national insurance, VAT and capital gains tax, incorporated practices finally get a break as the main rate of corporation tax will be reduced from 26% to 25%, with smaller companies paying even less.
However, unincorporated practices continue with the punitive 50% tax rate applicable to individuals, and this rate now appears here to stay.
Child Benefit in 2012/13 will continue at £20.30 per week for the firstborn and £13.40 each week for every subsequent child. However, this benefit is no longer available to families with one or more higher-rate taxpayers, which at the present rate means a salary of £42,475 or over.
Strict employment laws in the UK are being held responsible for small companies’ aversion to taking on new employees.
The Government’s solution is to make it easier for businesses to terminate employment, introducing initiatives such as ‘compensated no-fault dismissals’, which allow small firms to fire workers on any basis. Assuming that basic redundancy pay is offered and notice given, businesses comprising 10 employees or less will be safe from accusations of unfair dismissal.
The Government is enticing employers to hire young people with the new ‘Youth Contract’ subsidy. From April 2012, the three-year scheme involves payment of up to £2,275 to any business hiring an 18-24 year-old who has been jobless for three months or more. Details of employment restrictions or how to make an application have not yet been published.
The cost of borrowing for many businesses will be reduced thanks to the new National Loan Guarantee Scheme. High street banks are to capitalise on the Government’s AAA credit rating to accumulate funds in the wholesale money markets more competitively and make savings. This income will be shared amongst small and medium-sized businesses (turnover of £50 million or less) to trim borrowing by up to one percentage point.
State aid approval is currently being sought from Europe but the resources are expected to be accessible in a matter of months.
For more information please visit www.lansdellrose.co.uk or call Lansdell & Rose on 020 7376 9333.