Entrepreneurs could face tax changes after Pre-Budget Report

The Pre-Budget Report (PBR) is likely to introduce a number of tax measures targeting entrepreneurs, according to Deloitte.

Colin Hailey, tax associate director in the entrepreneurial business team at Deloitte in Cambridge, said the PBR was likely to have two dominant themes: the recession with its impact on the economy, tax receipts and public borrowing, and the General Election in 2010.

The Chancellor announced significant tax increases in the 2009 Budget, including the new 50 per cent income tax rate and the removal of personal allowances for those with incomes over £100,000, which will both take effect from 2010. In 2011 an increase in National Insurance Contribution rates and the removal of pension relief for those earning over £150,000 will also take effect.

“These are all factors that could potentially affect entrepreneurs as well as business managers,” said Mr Hailey.

“The planned policy stance for both 2010-11 and 2011-12 is for an unspecified cut in public spending. All three main parties have said that cuts in public spending are necessary but there could also be a role for tax increases and the policy stance for 2011-12 is tax rises of about £7.5 billion.

“It may well be that the Chancellor will postpone any decision on significant tax rises but some of the main options include raising VAT or National Insurance.

“Arguably one of the tax rises that would most affect entrepreneurs would be any changes in the rate of capital gains tax (CGT).

“Many entrepreneurs believed at the time of the introduction of the 18 per cent rate that the abolition of taper relief and the ten per cent rate would have an impact on their desire to be serial entrepreneurs, building and divesting of businesses.

“There has also been some speculation that the CGT rate could increase from 18 per cent bringing it closer to income tax rates but this wouldn’t raise a great deal for the Treasury.”

Alistair Darling will deliver his the Pre-Budget Report at 12.30pm on 9 December.

Deloitte will host a seminar at its Cambridge office on 15 December to discuss the PBR and how it will affect businesses and entrepreneurs. For further information please contact Selina Parsons on 01223 259 888.



In this press release references to Deloitte are references to Deloitte LLP, which is among the country’s leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk\about for a detailed description of the legal structure of DTT and its member firms.

The information contained in this press release is correct at the time of going to press.

For more information, please visit www.deloitte.co.uk.


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