An initial scan of the Chancellor’s Pre-Budget Report to Parliament on 10 December indicated that very little was changing as far as business was concerned. However buried away in the detailed text are several interesting measures and proposals.
There are four areas which are of particular interest and attached are further details of these.
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The item which has received the most publicity and created the greatest anxiety is the proposed clamp down on the tax affairs of small incorporated businesses. The Chancellor refers to “measurers closing loopholes involving tax paid on the personal income of owner managers of small companies” and then says that the government will “ensure the right amount of tax is paid by owner managers of small incorporated businesses on the profit extracted from their company”. Most people expect this to mean a tax, or national insurance, on dividends.
The views of many of us were summed up by John Whiting, a tax partner of PricewaterhouseCoopers when he said “The Revenue were saying don’t be a sole trader get legitimate and incorporate. Now suddenly its – right, gotcha!”
Although we do not have any details of what the Chancellor is proposing we will have to take what we do know into account in helping our clients plan the best way forward. We will be contacting those clients we feel are directly affected but if you are considering incorporation or are concerned as to how these changes may affect you please contact us using the contact section of the site. This, of course, not only applies to the items included in this News Section. We will be delighted to assist you in any way that we can.
As we enter the New Year, 2004 promises to be an interesting and challenging one for our clients and us. We would, however, like to take this opportunity of wishing you all a Happy, Peaceful and Prosperous New Year.
Clive Jones - Clifford Towers, Chartered Accountants
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