Osborne's red box delivers mixed bag for business owners

A specialist corporate tax lawyer says today’s budget could have been a lot worse for business owners and entrepreneurs in the region.

Susheel Gupta, a partner in Higgs & Sons’ expanding corporate team, says the reduction in corporation tax by one per cent per annum over the next four years and the small companies tax rate falling to 20 per cent next year are welcome changes.

“One positive move by the Chancellor is in entrepreneurs’ relief, which brings down capital gains tax to 10 per cent on the disposal of business assets of up to £5 million is a welcome change. The anticipated capital gains tax increase on non business assets to 28 per cent will only affect higher rate tax payers and coupled with retaining the annual allowance of £10,100 is better than expected news.

“For start up businesses in the Midlands it would also appear that there will be a tax break in employers national insurance contributions of up to £5,000 for the first 10 employees recruited.

“The downsides include the reduction in capital allowances for companies from 2012 and the VAT increase from 4 January 2011 will be of obvious concern to many businesses.

“I anticipate that this will lead to a higher level of activity within the retail sector this year but a tough first quarter in 2011.

“Hidden away in the announcement was a warning that the Government intends to introduce more general anti-avoidance legislation and we will have to wait to see exactly what this will entail.”

Time for a sharp exit for business owners?

A leading corporate lawyer says that now may be the time for entrepreneurs in the region to consider their exit strategy following Alistair Darling’s budget yesterday.

Nick Taylor, head of Higgs & Sons’ corporate team and recommended by Chambers as a leader in his field, says that the doubling of entrepreneurs' relief and the confirmation that there will not be an increase in the main rate of capital gains tax (CGT) currently at 18% is excellent news for local business owners. “My advice to local entrepreneurs would be to think quickly and seriously about their exit strategy now because the goalposts could move again in the near future.”

At the moment, the first £1m of lifetime gains for qualifying individuals exiting their businesses is taxed at an effective rate of 10% under entrepreneurs' relief. The threshold will now increase to £2m. Nick says that for people considering selling their business, from a tax point of view, now could be a really good time to do it: “The doubling of the threshold is designed to enable entrepreneurs to benefit more from their effort and investment, with the first £2m return taxed at 10% and subject to CGT at 18% above £2m.”

Higgs & Sons has a 12 strong corporate team working out of Higgs’ new £1.5 million headquarters on the Waterfront in Brierley Hill. To find out how Nick and his team can support you, contact him directly on 01384327129.