SEARCH, INDEX, UPDATES, CONTENTS, IDEAS, BUDGET 2002
The 2002 budget day was the 17 April. Most recent budgets have been in March.
Full report and details are available from the H.M. Treasury and Inland Revenue websites and are not be repeated here.
This budget, like all previous ones, will affect all our lives, and in many respects there is little we can do about it. Changes in alcohol and tobacco duties are reflected in retail prices. Apart from an extra trip to the continent, you either pay up or reduce consumption.
Corporation Tax
The biggest immediate change which will affect many businesses (not only
companies) is the
reduction in corporation tax for small businesses. Many sole traders and
partnerships should now consider trading through a limited company. This
decision should not be taken without considering all the consequences - only
someone who knows a lot about you and your business can help make the decision.
Contact us if your accountant cannot advise - we
will be reviewing all our own clients.
VAT
Although it did not hit the headlines, the change (good and bad) in VAT Bad
Debt Relief will affect a large number of businesses, and potentially provide a field
day for Customs and Excise inspectors.
NI
Employers will need to consider the pressure for pay increases to meet the
additional NI contributions of employees from 1 April 2003. If the
Chancellor had implemented the increase with immediate effect it, employees
would have borne the additional 1% employee contribution. If employers are
persuaded during the next year to increase pay by an additional 1.3% to
compensate employees for their after tax cost of 1%, then the extra cost for
employers will be 2.3%. This would be a significant extra cost.
Cars - 100 Enhanced Capital Allowances (ECA)
New cars registered after 17 April 2002 which are electrically propelled
or emit not more than 120gm/km CO2 qualify for ECA and are not restricted to the
usual £12,000 restriction for capital allowances. This includes some
models of Audi A2, Ford Fiesta and Fusion, Peugeot 206 and 307, Renault Clio,
Toyota Yaris, Vauxhall Astra and Volkswagen Lupo. A fuller list sorted by
CO2 emissions is
at http://www.vcacarfueldata.org.uk.
Additional Passenger Rate
A new tax free payment from 6 April 2002 - see APR.
Reminder - disclaimer applies. Please feedback your comments. This page above this line was modified 1 September 2002.
The following notes were written before the budget speech. We have not updated these notes which may or may not have been implemented as expected.
The Inland Revenue has already published proposals for alterations to the corporation tax regulations to be effective from 1 April 2002. The final legislation will be included in the Finance Bill and may differ from the draft proposals.
It is expected that tax relief will be introduced for the purchase of intangible assets and goodwill. This could make it beneficial to delay purchase until after 1 April 2002. The rules are not simple and the draft legislation runs to 60 pages.
It is expected that capital gains on the disposal of substantial shareholdings by companies will become exempt from tax, and tax relief for capital losses on similar holdings will be withdrawn from 1 April 2002. This could affect decisions on timing such transactions, and the use of offshore holding companies.
Reminder - disclaimer applies. Please feedback your comments. This page was last modified 16 March 2002.