2008 Budget

[Gillie]

Ok so this perhaps should be in the Accounts section, but some people don't head into that forum and I think it affects all of us.

So then anyone like to hazard a guess as to what Darling will announce on Wednesday in his first budget?

I heard today someone say vat increases as we have one of the lowest vat rates in Europe ....

Anyone fancy that one?

Any other thoughts/ideas/rumours around??

 

[KM-Tiger]

Some of us are old enough to remember when taxes were sometimes reduced.

The last time was .............. damn, my memory is failing!

 

[StephenW]

Tax Freedom Day

http://www.adamsmith.org/tax-freedom-day/

We will have to set our browsers to refresh in order to keep up with that page.

 

[DanMartin]

I spoke to the Department for Business, Enterprise and Regulatory Reform today who hinted that the government's new long awaited new enterprise strategy is going to feature. Darling is likely to unveil the first steps in ministers' efforts to simplify business support.

Lots of green measures including a plastic bag tax are also being mooted.

 

[DuaneJackson]

OK, I'll make an educated guess based on recent budgets and how favourable they are to smal businesses:

£40,000 flat charge per year to call yourself an entrepreneur (Regardless of if you make any money)

Threshold on CT reduced from £0 to £-10,000 - so even if you make loss you still have to pay tax on it

Entrpreuners relief clarified to state that the 1,000,000 has to be made in one deal.

 

[sm1]

Imagine if they just simplified everything!! .... or even better, they abolished taxes hahaha, I'll dream on

 

[Stephen Berry]

Bearing in mind the original purpose of income tax:

Income Tax was announced in 1798, and introduced in 1799, as a means of paying for the war against the French forces under Napoleon. France was threatening to invade, and had already landed briefly in Wales and Ireland. For much of his campaigns from 1795, Napoleon was better organised than the British forces. The cost of war had drained Britain’s resources, and run up a considerable national debt. The army was starving, and poor conditions in the navy in 1797 had led to mutiny.​

Now that the threat from the French has subsided, perhaps he will abolish income tax alltogether and we can revert to our pre-Napolean system? ​

 

[stugster]

Daylight Robbery!!!

 

[Cornish Steve]

I heard today someone say vat increases as we have one of the lowest vat rates in Europe

Are you serious? It's a horrendously high rate!

If the government has any sense, they'll cut taxes - especially on small business - to spur the economy. Sadly, though, I suspect there's not much sense anywhere near Downing Street.

 

[Cornish Steve]

Lots of green measures including a plastic bag tax are also being mooted.

Funny. I read a report, published in the Times, only yesterday from a bunch of British academics criticising the government for jumping on a band wagon for which there's no scientific support. Various green groups claim that over a million creatures a year are killed from plastic bags, which is complete nonsense. The academics found that hardly any creatures are affected by plastic bags. It's the government using the current obsession with all things green to impose another tax.

Here's a quote from the article:

Scientists and environmentalists have attacked a global campaign to ban plastic bags that they say is based on flawed science and exaggerated claims.

The widely stated accusation that the bags kill 100,000 animals and a million seabirds every year are false, experts have told The Times of London. They pose only a minimal threat to most marine species, including seals, whales, dolphins and seabirds.

British Prime Minister Gordon Brown announced last month that he would force supermarkets to charge for the bags, saying that they were "one of the most visible symbols of environmental waste." Retailers and some pressure groups, including the Campaign to Protect Rural England, threw their support behind him.

But scientists, politicians and marine experts attacked the British government for joining a "bandwagon" based on poor science. "The Government is irresponsible to jump on a bandwagon that has no base in scientific evidence," said Lord Taverne, the chairman of Sense about Science. "This is one of many examples where you get bad science leading to bad decisions which are counter-productive. Attacking plastic bags makes people feel good but it doesn't achieve anything."

For me, the key words here are "makes people feel good but it doesn't achieve anything". You have to admit, it's not often the government can make people feel good and steal their money in the same action.

 

[An Oasis]

Cigs, booze, prescriptions, general everyday products... mostly up. Petrol and diesel static due to the price of oil, lots of sneaky back door bits all up, a few token give aways just to appear like they know how to successfully run a country. Oh and anything that is not already VATable will be made VATable, of course VAT is still not really a back door tax.

Appear to be taking action on the nondoms but in effect doing not a lot.

A new cat will appear for business forums, making them an unsustainable business model.

 

[Alice3537]

We wouldn't need so many flipping plastic bags if there wasn't so much unnecessary packaging around the food we buy - and guess what that uses - yup, natural resources!

In cynical mood, I can see why the supermarkets are jumping on this one.......'Mmmmm, why don't we jump on this eco-friendly bandwagon - we can charge at a profit for a re-usable bag with our name emblazoned across it whether or not the consumer has bought from us that day, not have to supply carrier bags and increase profits from both sides'

Alcohol tax will increase, as will fuel, I reckon - you only have to take one look at the responses to the surveys to know that....I just wish the ACTUAL question was also given with the press release stating the 'stats'.

 

[Gillie]

I just get the impression that he will give lots away to the average guy and then stick up vat ... don't know why, just a feeling in me water!

 

[estwig]

0% tax on white vans and bricks

 

[Gillie]

0% tax on white vans and bricks

And 20% on tea .... !!

 

[estwig]

And 20% on tea .... !!

Noooooooooooo, evil person!!!

 

[UKSBD]

I suspect the big thing in this budget will be a clarification and tougening up
of income shifting.

 

[Alice3537]

Noooooooooooo, evil person!!!

Nah - more likely a reduction in tax...they wanna see kids sitting in parks with flasks of strong hot tea and a book on bird watching/train spotting and the like!!

Tax on pathetic wishy washy paper white tea makers....or a possible jail sentence....would be my tea manifesto!!

In addition... they are trying to GAIN the grey vote rather than lose it!!

 

It'll be all the usual crap.

Alco-pops and Strong Cider are the drinks they will be having a pop at - because apparently they are to blame for the yob culture I assumed was caused by a generation of undisciplined layabouts with nowt to do.

They'll sneak a few other taxes in, as they always do, disguised as a 'red-tape' shakeup - when really they cause more.

They'll try to con the country into believing that they are giving something to the old folks, when they are only keeping them under inflation, and also the poorer folk, who they'll rob in another way.

I don't look on it as a 'budget' as such - more another tax announcement. I really enjoy paying my taxes to these idiots, just to see what silly way they want to spend it this year.

 

[spooks]

Cigs and booze up again, petrol and diesel up another 2p a litre - £5 per gallon the norm!

Huge tax increase on large cars and 4x4s - £1000 first year road tax mentioned in yesterdays press

Hope no vat increase - its taken me years to work out 17.5% on our current prices!!

Once we're all out of our cars and all travelling on bendy buses then maybe they can use all the new cameras to catch people having fun and introduce a tax on that - god help anyone who dares to laugh!!

Emigrating looks better everyday!

 

[Rhyl Lightworks]

Various green groups claim that over a million creatures a year are killed from plastic bags, which is complete nonsense. The academics found that hardly any creatures are affected by plastic bags. It's the government using the current obsession with all things green to impose another tax.

Plastic bags may or may not cause the death of various creatures. That is not the point. What is beyond dispute, for me anyway, is that they despoil the environment. I am fed up of picking them out of my garden, seeing them flying around the streets in the wind, and apparently adding to the pressure on already overstretched landfill sites.
As with many 'green' taxes, you do not have to fill the governments coffers with them - just stop buying plastic bags. That is what the tax is designed to do anyway. They are an horrendous symbol of our laziness and wastefulness.
Barrie

 

[Philip Hoyle]

I suspect the big thing in this budget will be a clarification and tougening up
of income shifting.

There'll be no "clarification" at all. That would imply actually creating a tax law which was fully understandable and relatively easy to self-assess. The whole point of recent tax legislation is to muddy the waters, to try to get people to pay more tax voluntarily, by inferring that they are liable and using idle threatens to get people to pay. If you read the HMRC website, you could easily be forgiven for thinking that IR35 for example applies to virtually anyone supplying their services through their own limited company - the fact is that HMRC have won only a handful of cases and lost hundreds - the underlying legislation being completely incoherent as regards real life.

As for "toughening up" income shifting, there is actually no law against income shifting at the moment, so if one was brought in, it would be a new law. But, somehow I feel that the politicians will spin it so that it sounds as if there always has been a law and that those "naughty" self employed have either been taking advantage of a loophole or have simply been breaking the law, neither of which is true.

Income shifting is fast becomming a political hot potato. A few leading commentators who have contacts "in the know" are suggesting that it will be watered down or even not introduced at all tomorrow. There are reports that it is HMRC who are pushing for it, but there is an apparent lack of political will within the Treasury. It is very strange that other leading and growing economies are actually going the opposite way and bringing in new laws allowing the transfer of unused allowances and reliefs between spouses. After all, there is a general "free for all" tax free system of transfers between spouses for capital gains tax purposes, and also effective tax free transfers for inheritance tax, so it is illogical not to allow the same for income tax.

It is, however, fair that some people are aggrieved about "income shifting" - i.e. those who are employed and can't arrange their own tax affairs to their advantage. For example, a couple earning £25k each pay a lot less tax than they would if one worked for £50k and the other didn't work - that is not fair either.

Hopefully, there has been enough of any outcry to make them stop and think for once before running headlong into another policy disaster from which they'll have to perform a u-turn in the not too distant future. If they believe that there are certain businesses or types of business that are taking advantage of the existing system, then they should bring in restrictive and directed legislation at those only, not drag every husband/wife business into an unworkable and bureaucratic nightmare.

 

[UKSBD]

When I say clarification I don't mean make it simpler to understand, just
clarification that the new legislation is coming in (or isn't).

I know there is no law about income shifting at the moment, but was under
the impression that they were aiming to bring the new legislation in on April?
http://www.hm-treasury.gov.uk/media/1/D/consult_income_shifting.pdf
Has this been put back now?

 

[DanMartin]

Has this been put back now?

As it stands the legislation is due to come into force on 6 April (page 5 of the above PDF) although some sources are suggesting Darling may announce a delay or even the scrapping of the proposals tomorrow.

 

[UKSBD]

To be honest I think this is about the biggest issue in this budget and are
surprised the accountants haven't been discussing it more.
If it does go through I expect a lot of helping wives/husbands will suddenly
be getting a big dividend before April 6th.

 

[collingwood]

Help with childcare cost would be nice

 

[Gillie]

Help with childcare cost would be nice

You might have to be a bit more specific with that one, as I understood certain costs were already being met? Ie working tax credit and child tax credit where they cover the cost of childcare when you are working ....although mine are past the age whereby I could have applied for this etc and also wasn't given an allowance or money towards nursery for the their final year either, or get the trust fund thing!

In fact, its depressing thinking that I didn't get any of the above as mine are now too old!

 

[TSx]

VAT remaining the same from what I can see, and a 10% cut in corporation tax (presumably only for the larger companies) according to the bbc - and a few other things...

 

[Chippie]

Emigrating looks better everyday!

Now that's Spooky! Because apparently our little Darling is about to announce an emigration tax! It's going to be free for all and sundry waifs and strays to come in but £50k per person over the age of 0 to leave!!

 

[UKSBD]

Income shifting legislation postponed.

"The Government considered the responses received to the recent consultation and believes that a further period of consultation will ensure that the legislation in this area provides clarity and certainty for businesses and their advisers. The Government now intends to introduce legislation through Finance Bill 2009 and will not enact legislation effective from 6 April 2008."

 

[Alpha]

Better access to government contracts for small firms. Goal for SMEs to win 30% of all public sector business in next 5 years.

Government departments have over recent years actively prevented small businesses from gaining contracts even in the case where they offer a better quality service than bigger companies albeit in local areas rather than nationally.

Our nursing agency scores some of the highest marks regarding customer service but because it currently only deals with one health authority PASA decided that it could not be given a contract and has since actively tried to push us out. The purchasing department of the health authority concerned has refused not to use us so far because overall they can rely on us to provide a service whereas the bigger agencies don't care which they believe actually reduces their overall costs (Our invoicing is always accurate, when our nurses are booked in they do normally turn up or inform us of a problem allowing replacements to be found, whereas bigger agencies don't do anything more than book a staff member and that is the end of it. Our systems are far superior and we always place the right individual in the vacancy by knowing our clients and their needs)

 

[Cornish Steve]

Just to prompt some ideas, and not meaning to imply any one tax system is better than others (as far as I'm concerned, any tax is a bad tax), here are some of the tax policies I face in the US. To put them in context, private individuals pay income tax on every salary statement, but the total is adjusted once a year (which means paying what's missing or receiving a refund). The standard rate of income tax is subject to surcharges and allowances as mentioned below:

- Couples can claim either as two individuals or as a married couple - our choice.
- We receive a sizable allowance for each dependent (usually children).
- Mortgage interest and charitable giving is deducted from taxable income.
- Local taxes are deducted from taxable income (so there's not taxes upon taxes).
- For small business owners, business losses are also deducted from personal income.
- Above a certain limit, medical expenses can be deducted from income.
- Again, above a certain limit, necessary work expenses can be deducted from income.
- There are allowances for the purchase of energy efficient devices, including hybrid cars.
- Each year, I can set aside up to 15% of my income to a retirement account, which is tax-free.
- If I withdraw that retirement money before age 60, I pay a tax penalty for early withdrawal.

The thing that gets me, though, is the "alternative minimum tax". Usually, if there are options, the taxpayer can choose the option that means less tax. The AMT, however, is a minimum we must pay, regardless of tax calculated through the rules.

The one area that surprises me in the US is how social security works. I must pay a percentage (I think it's 7.5%) of my salary to social security; employers must pay a matching amount. There is, however, a limit. Once you've hit the limit for the year (it's currently equivalent to a salary of about $95,000), you don't pay any more. For many, this means that take-home salary increases during the year. At first sight, this seems a tax break for the rich. If you think about it, though, the reasoning is solid: Individuals pay an amount in social security to the government for its safe keeping; later in life, the individual claims back the money they paid. In other words, the program is not meant to steal from the rich to give to the poor. It's more a compulsory retirement savings scheme. This is why I get a statement each year telling me how much I've put aside and how much the government will pay me. The link between what I pay and what I later receive is not lost.

 

[Dawg]

A summing up of the budget (nicked from the FT)

"A kind observer might describe this as fluff. A fairer characterisation would be that the Chancellor is pressing barnacles onto the hull of the British economy: hard to remove, a modest obstacle to progress, and just plain ugly.
...
The truth is that it was never sensible to expect important improvements to the nation’s fiscal system to be announced every March. Mr Darling did very little today; we should be thankful for small mercies."

 

[Dan Matthews P&FM]

My absolute favourite part of what was a very boring budget, was during Cameron's response speach. The bit where he told off Ed Balls for saying "who cares" under his breath. "Who cares, says the minister for children", on TV - big audience, bad move Mr Balls.

Also liked the later line "just because he's the minister for children doesn't mean he has to act like one". Corking.

 

Agreed - that was the highlight.

They took the easy option again - hit the smokers (who give them more revenue than you might care to imagine), those who like a tipple (horrid stuff, but I do try to be sociable when I can), plus more 'green' taxes.

Can I ask people - do you actually think that the little savings we make in our tiny islands will matter a jot when taken away from the masses of stuff pitched into the air from the USA, China and some other Asian countries? What the hell is the point of torturing us all the time? My reckoning is - someone thought that nobody would shout about 'green' taxes - just an easy option for a big Jessie with no backbone !!

 

[An Oasis]

As a business if you stood up at an AGM and came up with the same old twaddle year after year your shareholders, clients... would know that you had **** all ideas and that they had better look for another supplier.

 

[Alex Bellinger]

Some commentary on what the Budget means and doesn't mean for small businesses is in a special edition of SmallBizPod today.

Cheers

Alex

 

[Ian J]

One interesting item for me that came out of the budget was the removal of it's ban on assignment of debts from Government contractors and suppliers.

The ban on assignment of debts from many Government departments has meant that their suppliers cannot factor which in many cases has ruled them out of being able to supply them at all.