Emergency Budget 2010

The first budget of the new Government will take place on the 22nd June 2010.

What can we expect, there has been much uncertainty in the small business environment especially with SME and the burden which is IR35.

It is expected there will be a rise in VAT from 17.5% to 20%, which will yield an estimated £11.5 billion in to the Treasury. Business leaders have called for the Government to allow sufficient time for businesses to prepare for the increase. The administrative burden on business is huge and expensive as we saw with the last VAT change.

Capital Gains Tax (CGT) is also on the Governments hit list and is expected to be set in the region of 40 to 50 per cent.

Such a rise in CGT would affect investment businesses particularly the buy-to-let side of the housing market. Such a large increase in CGT could deter potential investors and landlords from buying houses for let, which could put pressure on councils finding rental properties for people as the number of rental properties available starts to stagnate or even fall because of the CGT increase.

There could be good news for small businesses as a full review of IR35 has been promised and it is expected that the Corporation Tax Rates will be reduced. It is very good news for contractors who have been plagued by IR35, the Conservatives recognise that the IR35 rules need to be relaxed in order to stimulate and free up the freelance market.