Pre-Budget report for business

A wide-ranging package

Small business received a wide-ranging package of extra finance, including a scheme to spread tax payments and a new three-year loss carry-back rule for losses up to £50,000. In addition, the increase in small companies’ rate to 22 per cent is deferred for a year, to 2010.

Corporation tax
The government will defer the increase in corporation tax for small businesses. Corporation tax for small firms was set to rise to 22 per cent from April 2009 from 21 per cent as part of a staged increase set out in the March 2007 Budget.

Small and medium-sized enterprises (SMEs)
The Chancellor announced he would deliver £1bn of tax cuts through the Small Business Finance Scheme and £2bn of loan guarantees.

Lending to SMEs
Banks will receive an extra £4bn to help SMEs. The Chancellor said banks should follow the Royal Bank of Scotland’s example of not increasing charges to SMEs.

Business tax repayments
SMEs will be allowed to spread business tax payments over a period to help to ease cashflow and credit constraints.

Export guarantees
Small businesses will gain £1bn in export guarantees from this January through the Export Credit Guarantee Department.

Tax repayments
There will be an extension of a scheme to help businesses that were previously profitable but are now making losses. Losses of up to £50,000 can be offset against profits made in the past three years rather than just one year.

Foreign dividends
The Chancellor introduced an exemption for companies’ foreign dividends from tax in 2009, in an effort to allay concerns over proposed changes to taxation of foreign earnings that have led some companies to shift their tax domicile out of Britain.

Rates
Empty commercial properties will be exempt from business rates from 2009/10 if the rateable value is less than £15,000.