AccountingWEB, HR Zone’s sister community site, is on hand to guide you through Brown’s maze – examining the impact of new measures on small and medium-size businesses and drawing together all the budget announcements and analysis. See https://www.accountingweb.co.uk/budget for more information. Below is an at-a-glance summary of the measures contained within the Budget Report. A full copy of Gordon Brown’s speech can be read by clicking here. Referring to the avoidance strategy as a “loophole,” Brown said the new measure would bring the tax on dividends in line with the tax rates on small businesses.
Companies hit by 19% tax on distributed profits
Gordon Brown followed through with his threat to clamp down on company owners who avoid tax by paying themselves dividends with a new 19% tax rate on “distributed profits”.
As widely expected Gordon Brown announced that the Inland Revenue will merge with Customs and Excise, “simplifying life for businesses by giving them a single point of service.” As a result of the merger, the Chancellor said that a total of 10,500 jobs would be cut, with another 3,500 staff relocated to the provinces.
Anti-avoidance: The devil is in the detail
Accountants and small business people are to bear the brunt of Chancellor Gordon Brown’s determination to get tough on tax avoidance.
The Chancellor plans to introduce a US-style law requiring those who market tax avoidance schemes to get clearance from the Revenue first before they are allowed to market them to taxpayers.
Home is where Gordon’s heart is
The Chancellor today’s heralded the findings of the Barker Report into the state of the UK’s housing stock. The report concludes that a total of 140,000 homes need to be constructed per annum to meet the changing demands of Britain’s demographic profile.
Brown also further consultation on UK REITs. An idea borrowed from the United States and Europe, REITs are packaged as a tax-efficient investment model aimed to open up the world of property investment to the wider public by allowing individuals to invest primarily in listed property companies.
VAT – no surprises for most businesses
No change in VAT rates in the Budget, but in keeping with Gordon Brown’s programme of reducing VAT compliance costs for business the VAT registration threshold will be increased in line with inflation from 1 April 2004 from £56,000 to £58,000.
New company van tax regime announced
From 6 April 2005, a nil tax charge will apply to employees who have to take their van home (for example, who are on call) and are not allowed other private use. As a transitional measure, the existing benefit in kind charge of £500 (and £350 for older vans) will be continued for all vans where private use is unrestricted.
Construction Industry Scheme faces new shake-up
The current Construction Industry Scheme (CIS) was introduced on 1 August 1999, with considerable disruption to the industry. However, it remains unpopular and burdensome and the Revenue has now published an outline of the changes to be made to the new scheme set to start in 2006.
Sports club tax breaks improved
The Chancellor has improved the lot of amateur sports clubs registered with the Inland Revenue as Community Amateur Sports Clubs (CASCs).
