Posted by on 12 June 2009 | 0 Comments

In his 2009 budget speech on 22nd April 2009, the Chancellor did not disappoint by introducing yet more complex provisions to an already excessively complex tax system. In the House of Commons the speech generated all the atmosphere found in the cockpit of a pilotless glider! But what's in it for you?

If you're investing in plant & machinery:

One of the headline grabbing changes for business was the surprise re-introduction of enhanced tax breaks for capital investments in plant & machinery. Company's investing in qualifying plant & machinery from 1 April 2009 (and unincorporated businesses from 6 April 2009) will be able to claim 40% First Year Allowances on the total expenditure. The measure is temporary and is expected to be available for 12 months from April 2009.

In addition, revisions will be made to the energy efficient scheme list to include a 100% enhanced capital allowance for expenditure on plant and machinery that is energy and water efficient.

If your business has made trading losses:

If your business has made or is likely to make trading losses, the Budget extends the period that losses can be set back against previous years profits to 3 years. This change applies to company's and unincorporated businesses such as sole traders, partnerships and LLP's. There are some restrictions, however, the rules do still provide your business with more opportunity to obtain tax repayments from previously paid tax. If your business has made or is expecting to make losses you should contact us so that we can help you maximise any available tax repayment and secure some positive cash flow as soon as possible.

If your business provides company cars:

The Budget has confirmed the proposed changes to the capital allowances regime for company cars. The current expensive car regime has been replaced by a new regime with an environmental focus. From 1 April 2009, cars below a certain CO2 emission limit will form part of the general plant and machinery capital allowances and others will attract a 10% allowance. The £80,000 price cap that currently applies when calculating the cash equivalent of the car benefit will be abolished – in effect the list price for tax purposes will now be unlimited, making very expensive company cars less tax and NIC efficient.

If you're an employer:

New measures were introduced in the Budget specifically applying penalties for the first time in relation to employers who are late in making PAYE (Pay as you earn) and NIC's (national insurance contributions) in respect of payroll. Penalties for the late payment of taxes and deductions collected through the PAYE system will depend on the number of defaults in any 12 month period, starting with no penalty for the first default. A second late payment and any subsequent failures in the default period will attract a penalty of two percent rising to five percent of the unpaid taxes. Further penalties of five percent will be imposed for any amounts of tax still unpaid at six and 12 months. Further penalty measures have also been introduced in respect of the CIS (construction industry scheme).

We are already working hard on developing planning strategies to help you following the Budget announcement. The content of this briefing is intended to highlight a few topical issues arising from the Budget 2009. You should not act upon this information without taking proper professional advice after a thorough examination of your situation. It should not be regarded as a basis for ascertaining liability to tax or determining investment strategy in specific circumstances.