We have today updated our website for the new Advisory Fuel Rates from HMRC.

To go to our advisory fuel rates page please click here.

We have now updated our Budget Reports page with our 2012 Budget Report detailing the measures outlined by the Chancellor today, 21 March 2012.

You can access our full 2012 Budget Report by clicking here.

Key announcements by the Chancellor in Budget 2012 included:

A stable economy

• A Budget with a neutral impact on the public finances; and
• Clear progress in implementing the Government’s fiscal consolidation plan and reforms to welfare and public services, with borrowing £11 billion lower over the forecast period than predicted at the 2011 Autumn Statement.

A fairer, more efficient and simpler tax system

• An increase in the personal allowance by a further £1,100 in April 2013 – the largest increase in the personal allowance in both cash and real terms for the last thirty years;
• An additional one per cent reduction in the main rate of corporation tax. The rate will reduce from 26 per cent to 24 per cent in April 2012, then to 23 per cent in April 2013 and to 22 per cent in April 2014;
• A reduction in the top rate of tax from 50 pence to 45 pence in April 2013, where the direct cost is paid for more than five times over by other measures that affect the best-off;
• The introduction of a limit on all uncapped income tax reliefs. For anyone seeking to claim more than £50,000 of relief, a cap will be set at 25 per cent of income (or £50,000, whichever is greater). This will help ensure that those with the highest incomes pay their fair share;
• The correction of certain anomalies in the VAT system that cause very similar products to be taxed very differently. The Government will also close loopholes in the VAT system to prevent avoidance and ensure compliance;
• A crack down on tax avoidance to protect revenues by closing down schemes which avoid stamp duty land tax, corporation tax, inheritance tax and income tax with effect from today; and
• An increase in the tax charged on high value properties by introducing a new Stamp Duty Land Tax rate of 7 per cent for residential properties over £2 million.

Reforms to support growth

• Relaxing Sunday Trading laws during the Olympics and Paralympics to allow retailers to make the most of the occasion;
• Developing a National Roads Strategy, as well as exploring new ownership and financing models for the national roads network to drive up efficiency and leverage in private investment;
• Introducing a package of oil and gas measures to secure billions of pounds of additional investment in the UK Continental Shelf;
• Establishing a UK centre for aerodynamics to open in 2012 – 13 and support innovation in aerospace technology;
• Supporting Network Rail to invest a further £130 million in the Northern Hub rail scheme to improve transport links between the northern cities of England; and
• Publishing a strategy for gas generation in the autumn, recognising that gas-fired electricity generation will continue to play a major role in UK energy supplies over the next decade and beyond.

The Budget also announces a reduction of the Special Reserve to reflect the end of UK combat operations in Afghanistan by the end of 2014. This is funding held over and above the Ministry of Defence budget. The cost of operations will continue to be paid on the same basis. At the same time, the Government will reinvest £115 million of the reduction in the Special Reserve provision to improve service accommodation and support military personnel and their families.

With all the recent gloomy predictions for the UK’s economy, George Osborne today outlined a range of new measures intended to drive growth and support small and medium-sized businesses.

Key points included in the Chancellor’s Statement were:

A new National Loan Guarantee Scheme worth £20 billion will see the Government underwriting loans to small enterprises, enabling banks to offer lower rates.

The British Bankers’ Association (BBA) will work on a new system for referring firms whose loan applications have been refused to Community Development Finance Institutions.

To help medium-sized firms access finance through non-bank channels, the Government will launch a £1 billion Business Finance Partnership, co-funded through private sector investment.

A working group led by the Department for Business (BIS) will look at ways of helping small and medium-sized businesses access alternative sources of funding, including opportunities to sell bonds, and will report by next year’s Budget.

Business angels who invest up to £100,000 in new enterprises will benefit from a 50% income tax break under a new Seed Enterprise Investment Scheme. They will also escape capital gains tax on profits from 2012/13 that they reinvest through the Scheme.

The Enterprise Investment Scheme and Venture Capital Trusts will be simplified and refocused.

An additional £75 million will be made available for small and medium-sized technology businesses to develop, demonstrate and market new products and services.

The business rate holiday for small firms that was due to expire in October 2012 will be extended to April the following year.

The 3p rise in fuel duty expected in January 2012 will be postponed until August.

A £400 million Get Britain Building investment fund will be used to boost the construction industry through the building of new homes. A Government-backed indemnity scheme will make 100,000 new 95% mortgages available for new-build properties.

The Regional Growth Fund is to be increased by £1 billion.

The Lancashire and Humber Local Enterprise Partnerships (LEPs) have been given the go-ahead to form Enterprise Zones, the North East Zone will be expanded to include the Port of Blyth to encourage investment in renewable energy, and a new zone will be considered for Battersea.

A number of Enterprise Zones will benefit from 100% capital allowances. These Zones are: the Black Country, Humber, Liverpool, North Eastern, Sheffield, and Tees Valley.

More rural businesses will gain access to superfast broadband, while further measures will ease compliance burdens on agricultural businesses, and £25 million for rural tourism.

Six Rural Growth Networks will be piloted to see how local authorities and LEPs can use new planning rules and infrastructure investment to support local economic growth. In particular, £2 million will be spent over the next three years on supporting rural enterprises led by women.

The qualifying period for unfair dismissal claims will be increased from one year to two from April 2012, and claimants will have to pay a fee to take their employer to a tribunal.

The Government will consult on introducing compensated no-fault dismissal for firms with fewer than ten employees, and on reducing the length of the collective redundancy process for 100 or more staff from 90 days to 60, 45 or 30 days.

For our full summary of the main points please click here.

It must be some six years ago I first met (virtually) Emily Coltman who was at the time working for a regional firm of accountants.

Emily was not long qualified but she was very interested in new technology and how this could help the smaller business, so no wonder that Emily has ended up as chief accountant FreeAgent.

I guess Emily felt she had more to offer because she has now published her first e-book – Finance for Small Business: A straight-talking guide to finance and accounting.

I have actually read it, cover to cover, before I decided to say anything about it.

It is another book worth reading if you are starting out on your own path towards self employment/small business.

There are a great many of these books, at Holden Associates we have our own £FREE New Business Kit.

So is it worth £10 (or £8 on Kindle), well actually Yes it is, and I have actually read the book rather than the promotional literature!

For the e-book click here.

For Kindle edition click here.

In the world of small and medium sized businesses change is an on-going feature of running a business. Some of the changes that occur are beyond the control of business owners. Frequently these changes emanate from statutory obligations to which the business must comply. For example changes that are instigated by Companies House or more commonly changes that come from Her Majesty’s Revenue and Customs (HMRC).

Different schools of thought

Even though HMRC have not confirmed it officially there is reason to believe that they are moving towards the closure the Time to pay taxation scheme. This is a scheme which allows small or medium sized businesses to delay or stagger payment of their taxes as long as they have prior agreement from HMRC.

A common and most obvious opinion is that any such change may result in financial hardship for small businesses. Staggering or delaying payment can have a positive effect of improving cash flow. As such the business is able to benefit from the delay in paying taxes. Satisfying taxation bills can mean that a considerable sum of money has to be paid out in one go. Inevitably this has the knock on effect of reducing any monies available to spend on a daily basis and may mean financial hardship. The ability to stagger the bill inevitably gives the business more options and an increased ability to manage their cash flow thereby improving the chances of survival.

Recent data

When compared to historical data dating back to 2009 figures show that HMRC has steadfastly declined repeat applications. As such one third fewer applications have been granted. The reduction in the number of businesses being able to delay payment coupled with the recent uncertainty in the current economic climate brings with it increased concerns for business owners. Statistics show that 9.3% of businesses who applied for time to pay in the first quarter of 2011 were refused permission to do so. This is compared to 6% in 2010 and 2.9% in 2009.

Allowing businesses to delay payment is a bonus during normal economic conditions; it can be a god send during difficult or turbulent times. Once again HMRC has not confirmed that the time to pay scheme will be scrapped but the writing is on the wall. Never the less HMRC still continues to offer a listening ear to businesses that find themselves in difficulty. Their Business Support Service can discuss options for payment and ways forward for the business. It is important that any options discussed be shared with your accountant as they will be able to add increase understanding to the situation.

Keeping abreast of changes

As well as working in your business it is equally important to work on it by keeping abreast of any changes that may or may or affect your business. The continued viability of any business depends on that business being able to satisfy taxation demands as such it is important to know what HMRC are doing or thinking about.

It is not uncommon for businesses to either be taken over by a larger company or to be put on the market as a going concern. As such both the buyer and the seller will be interested in knowing what the financial value of the business is. There are number of many different ways to work out the financial value of a business. For the small to medium size business, there are three main categories that are frequently used. These are the:-

• Income value
• Market value
• Asset value

In brief, these would be described as follows:

Valuation based on income: Value based on income focuses on looking at the future potential earning power of the business. Factors such as past earnings, expected future growth, owner compensation adjustments, and specific risk factors, such as customer concentration, weak management and lack of diversification are all taken into account when income based valuations are used.

Market Valuation: This method of valuing a business is similar to the way that houses would be valued when selling it. What is being looked at under the microscope is what the market will pay for the business in question. Information such the sale of comparable businesses within the industry that the business is in is collected and compared to try and ascertain what the going price is.

In Income and Market valuations a price multiple will need to be found. This is usually price divided by gross sales and price divided by earnings. The applicable price multiple is selected primarily on the profitability of the business. For example, a business with high profits would have a higher price multiple applied to it. A business with low profits would be assigned a lower price multiple. Using this approach allows for a more accurate result to be obtained when a minimum of about a dozen comparables are used.

Asset valuation: This valuation procedure assumes that a business is worth the fair market value of its tangible (physical) assets plus its intangible assets. Then from these total assets, liabilities or debts are deducted. To value a business that has intangibles, several methods can be used. The calculation deals with tangible assets, intangible assets, liabilities and adjustments thereof, to arrive at an estimated value for the business.

If the company in question is not making a lot of money, then there will be no intangibles. In this situation, the asset valuation method is usually used when a business has capital tied up in equipment and other tangible assets and the other valuation methods come up with a price below the actual asset value, without any good will.

In a worst case scenario a seller would like to acquire at least what the equipment is valued at if they have any equipment and the value of their order book. The long and the short of it is your business needs to have tangible assets that can be measured when it is being valued.

The above is only a very brief overview, and the process of valuing a business is far more complex and involved.

Mileage rates from today, 6 April 2011, will be increased to 45p a mile for the first 10,000 miles. The rate for mileage over the first 10,000 miles will remain at 25p a mile.

With effect from today the personal allowance rate increases, this is the amount of income you can earn before you pay tax.

The increase in this years (2011/2012) personal allowance takes the allowance from £6475 to £7475. There is also an increase in the National Insurance threshold employees (this includes directors), they will now be able to earn £600 per month without paying tax or National Insurance. This is a substantial increase from last year’s threshold of £475.

Personal allowances from 6 April 2012 (2012/2013) will be increased by £630, that makes the personal allowance for a single person under 65 £8105.

With effect from today small and medium sized businesses will benefit from a 1% reduction in the rate of corporation tax:

Corporation tax will be reduced to 20% for small companies with effect from 1 April 2011 (down from 21%).

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If you are considering starting a home based business you will most certainly need to think about the formation of a business. It is likely that you may find that becoming the sole proprietor is the easiest and most appropriate choice to make in terms of the legal status of the business.

What does it mean to be a sole proprietor?

Being a sole proprietor means that you are 100% responsible for every aspect of the business, including, administrative decisions, legal compliances and any debts that may be owed. There are many benefits apart from being in sole control it gives you over the business. Sole traders are not accountable to anyone other than themselves.

Additional benefits include minimum paper work to be filed as opposed to when a company is incorporated, legal services are also optional. Although many small businesses feel like they should be incorporated in order to win larger contracts, they often do not realise the additional complications that it may create. Business owners who do taxes as a sole proprietor tend to have a less to do than those who are required to file forms for a corporation.

Downsides of being a sole proprietor

If you decide to become the sole proprietor you could be will putting your own credit record at risk. The money you borrow to start up the business will come from your personal credit, and therefore you will be responsible for paying it back. If the business should fail, this would mean liquidating all of your assets to pay back lenders this may include personal property.

Alternative to becoming a sole proprietor

You may also wish to consider an alternative business structure such as a partnership. If you have a friend or colleague who would like to go into business with you, this could be a better choice. With sole proprietorship, you have complete control over the company. But for many people, this is not the best option. With a partnership, you are able to discuss business decisions and get the opinion of another person. You can provide each other with feedback and support.

There are downsides to being in a partnership as well. For example in a partnership you are liable for your partner's actions. Hence if your partner does something illegal or has any negative spending habits, you will also be liable too. As such you have to make sure you really trust the person you enter into a partnership with.

You will also have to make sure you and your partner work well together. Since you and your partner both own 50% of the business, no single person will be in control. If you have a disagreement with your partner, you may find it hard to move the business forward. Of if partner decides to leave the business it is likely that the business may close.

Ultimately, your choice will depend on how confident you are that you can control the business effectively on your own.