There were few surprises and on the whole this was a good Budget for small businesses and entrepreneurs. There were no further bombshells for higher earners in terms of direct taxation although there is a stealthy increase in Inheritance Tax (via the nil rate band being frozen for the next four years) and a new top rate for Stamp duty. Read my Budget highlights below.

How will the 2010 Budget affect you or your business – call me on 01344 620495 or email your enquiry

Read the full Budget 2010 Report here

Individuals

• Personal allowances still being withdrawn from April 2011 for those earning £100,000 or more
• No changes to 50p income tax rate rise from this April
• No change to Pension restrictions affecting those earning £130,000 or more
• No further increase to National Insurance due to rise 2010/11
• Income tax rates frozen for non high-earners
• Freeze on Inheritance Tax for a further four years
• Increase in ISA allowance from £7,200 to £10,200 from April
• Stamp duty waived for first time buyers up to £250k for two years
• Stamp duty increased to 5% for those purchasing £1m homes

You and your business

• Capital Gains tax remains at 18% (for now) but planning in this area is strongly recommended as I still anticipate this party coming to an end sooner rather than later!
• More relief for Entrepreneurs when you come to sell - doubling of relief which means you only have to pay 10% tax on first £2m of business assets disposed of.
• No change to 21% Corporation tax rate which is good news for businesses
• Time to pay tax scheme extended to next parliament
• Reduction of business rates from October means lower tax for small to medium sized businesses
• New UK Finance for Growth company overseeing financial support and funding for businesses. Includes new funding for fast growing businesses
• Doubled Investment Allowance for small businesses which means up to £100k of capital expenditure can be relieved in the year of purchase – get spending.

Watch this space for Budget highlights on Wed 24 March. Follow my Budget tweets on http://twitter.com/dbsellek Call me on 01344 620495 or visit Taxation for top tax saving tips before 5 April.

In the meantime, here are my top Budget predictions:

Corporation tax to remain static I don’t envisage any changes to Corporation tax as companies are the government’s building blocks for re-structuring the economy.

The Chancellor deferred the increase of Corporation tax from 21 to 22% in the Pre-budget and I think this will happen again in the Budget. The small companies’ tax rate applies to all qualifying companies with profits of no more than £300,000. 

The main rate of Corporation Tax kicks in when company profits exceed £1.5m and at 28% looks expensive internationally so I don’t expect any increase here.

Contact Mark Busby on 01344 620495 or email your Enquiry - for advice on running a tax-efficient business.

No change to Capital Gains

Capital Gains Tax is hotly tipped to increase in the near future as it is currently misaligned with income tax rates. If you are considering selling any assets then best to do so before the Budget. Make use of any Capital Gains allowance (£10,100) before it expires on 5 April.

Don’t forget you can double your Capital Gains allowance to £20,200 by sharing any capital gains with your spouse. You can register investments in joint or sole names and married couples and civil partners can share income 50:50 by simply registering title in joint names. Transferring assets to your spouse if they are lower earners has additional benefits too. Make use of their personal allowance (£6,475) and your spouse’s basic rate tax band at 20% on earnings up to £37,400.

The absence of any change to CGT is seen by many commentators to be linked to the forthcoming election. So once this has passed changes to tax are anticipated. By acting now it is possible to fix your CGT rate to 18% even if you still want to keep possession of the asset.

Contact Mark Busby on 01344 620495 or email your Enquiry - for more information on fixing your CGT rate.

Freeze on personal allowance and basic tax rates

Personal allowances and the basic rate band have been kept the same for two years now and it would not surprise me if this continued into 2011/12 despite the resurgence of inflation. This would provide a stealthy way to increase taxes and alleviate some of the pressures that must exist on the Chancellor to push up the basic rate of income tax.

Contact Mark Busby on 01344 620495 or email your Enquiry - for the latest personal allowance and tax rates.

For sole trades and partnerships with accounting years ending on 31 March/5 April, if you have budget left over or need to purchase capital equipment (up to £50,000) then do this before your year end. Spending in this tax year means you will receive tax relief this January rather than having to wait two years. It makes for a sensible tax planning strategy for sole trades and partnerships given that income tax rates are double those of companies.

Call Mark Busby on 01344 620495 or email your Enquiry on tax saving tips and loss claims.

Capital Gains Tax is hotly tipped to increase in 2010 so if you are considering selling any assets then best to do so before the Budget. Furthermore any of the Capital Gains exemption (£10,100) that is not used in this tax year will expire on 5 April.

The absence of any change to CGT is seen by many commentators to be linked to the forthcoming election. So once this has passed changes to tax are anticipated. By acting now it is possible to fix your CGT rate to 18% even if you still want to keep possession of the asset.

Call Mark Busby on 01344 620495 or email your Enquiry for practical Tax Saving solutions.

Shareholders of family companies should consider the timings of dividend payments to ensure maximium tax-efficiency especially those who anticipate paying tax next year at the new top rate of 42.5%.

Where company reserves allow, individuals facing this position might want to consider taking dividends before 5 April thereby paying tax at 32.5% gross. The reverse advice would apply to those facing falling revenues, as deferring a dividend until after 5 April could reduce or even eradicate their tax liability.

HMRC will be looking hard at large payments in early April so timing is crucial. Call Busby NOW on 01344 620495 or email your Enquiry 

Income realised before 5 April will be taxed at 40% therefore representing a 10% saving for top rate tax payers. With just under one month to go before the new top rate of income tax comes in for those earning £150,000, consider restructuring the ownership of income assets with spouses or civil partners to avoid either of you earning £150,000. As an alternative you could switch to a Capital Growth strategy where gains are currently taxed at 18% (but bear in mind this rate is tipped to change or could change). HMRC are looking closely at the timing of dividend payments. If not robust, they may argue the dividend was paid in 2010/11.

Call Mark Busby NOW on 01344 620495 or email your Enquiry for the latest information.

Make use of tax-efficient investments such as ISAs and Pensions. Don’t waste this year’s ISA allowance invest before 5 April. If you were born before 6 April 1960 the maximum you can save is £10,200 (since 6 October 2009). Half can be invested in cash and the remainder in stocks and shares. If you were born after this date you can invest £7,200 this tax year. From April 6 everyone will be able to save £10,200.

Call Mark Busby on 01344 620495 or email your Enquiry on how we can help you with tax-efficient investments.

Pensions have become ever more complex with high earners not only facing pension relief curtailment but also penalties for large contributions (£20,000 or more).

While pension relief has been curtailed for those earning £130,000 or more, those earning less can contribute up to 100% of their salary.  Non-earners can still benefit from tax relief on gross contributions of £3,600 per annum.

Those earning £130,000 or more should seek the latest advice on pension relief and contributions, since the tightening of rules in the Pre-Budget. Now any pension benefit contributed by an employer or third party will be taken into account when calculating whether your income exceeds £150,000.

There are also pension relief restrictions preventing individuals from making large irregular annual pension contributions before 6 April 2011. This affects those earning £130,000 (where an employer’s contributions takes them above the £150,000 income level).

**Stop Press**  the minimum age you can take your pension is rising to 55 on 6 April.

Call Mark Busby on 01344 620495 or email your Enquiry for tax-efficient investment and financial planning advice.

Don’t overlook transferring assets to your spouse if they are lower earners. This makes use of their personal allowance (£6,475) and also capital gains allowance (£10,100). You can also make use of a spouse’s basic rate tax band at 20% on earnings up to £37,400.

You can register investments in joint or sole names and married couples and civil partners can share income 50:50 by simply registering title in joint names.

Call Mark Busby on 01344 620495 or email your Enquiry.