Link: Budget 2003
Chancellor Gordon Brown promised a reduction of up to 500 regulations in an attempt to slash the administration burden smaller companies face.
While this and other measures are not expected to bring fundamental changes for small companies, they should as a package offer smaller businesses some benefits.
‘It’s a relief that the government is attempting to reduce the burden of red tape for companies, especially as in other areas, for instance individuals claiming tax credits, they are increasing it,’ said Stephen Davies, senior consultant at Ernst & Young.
At the heart of the changes are measures to reduce compliance costs, and the regulatory burden of VAT for small and newly registered businesses.
This includes raising the annual taxable turnover limit to £56,000, increasing the turnover ceiling to £150,000 for businesses wishing to use the flat-rate scheme and new businesses using the annual accounting scheme, and the relaxation of automatic payment penalties for a greater number of businesses.
The deregistration threshold for VAT has also been increased to £54,000.
Many more companies will be able to claim tax credits on research and development, as the threshold needing to be spent on R&D is reduced from £25,000 to £10,000.
The government has also introduced measures to modernise and simplify employee share schemes, and to support and simplify capital gains tax.
Another big move by the government saw the raising of the threshold under company law to increase the number of businesses eligible for 40% first year capital allowances for plant and machinery. Businesses with a turnover of under £20m a year will now be able to claim the allowances.
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