The Chancellor gave his Budget on 24th March 2010 and the changes announced will affect all franchise businesses.
It was confirmed that the new 50% rate of income tax will come into effect from 6th April 2010 for those with income over £150,000. Personal allowances will also be restricted for individuals with income over £100,000.
Capital Gains Tax rates have remained the same. However, the lifetime limit for Entrepreneurs’ Relief has doubled to £2m for disposals made from 6th April 2010. The Inheritance Tax nil rate band has been frozen at £325,000 until 2014/15.
It was announced that no Stamp Duty Land Tax will be payable by first time buyers on completion of the purchase of homes below £250,000. This takes effect immediately for 2 years until 25th March 2012. The rate of Stamp Duty Land Tax charged on purchases of properties over £1m will be increased to 5% with effect from 6th April 2011.
There will be no increase in the rates of corporation tax for 2010/11 which will remain at 21% for small companies and 28% for large companies.
There is a boost to franchises purchasing plant and machinery. The annual investment allowance has increased to £100,000, giving a 100% first year allowance on capital expenditure up to this level. Any additions over this amount will also receive capital allowances of 20%. This applies to equipment bought after 1st April 2010 for companies and 6th April 2010 for unincorporated businesses.
The VAT registration threshold has been increased to £70,000 with the deregistration limit increased to £68,000. The fuel scale charges have also been increased for periods starting from 1st May 2010. It is worth noting that payments made by cheque to HM Revenue & Customs will now be treated as being received once the amount has cleared through their bank account and not when the cheque is received.
With regard to business rates the government will fund a temporary increase in the level of rate relief so that small firms occupying properties with a rateable value up to £6,000 will pay no business rates for 1 year from October 2010.
Carl Reader is the head of franchising at franchise accountants Dennis & Turnbull, a leading firm of accountants in the franchise industry.
The above information is provided as general advice and no liability is accepted by the author, Dennis & Turnbull or Select Your Franchise in respect of individuals or businesses acting on the above. Independent advice should be sought in all circumstances.