You have undoubtedly been inundated with information about this budget but as always at A4G, in line with our determination to be the best all-round advisers to owner-managers, we have looked past the headlines and focused on the elements from the budget that affect you as a business owner.

The main question on the minds of most of our clients at the moment is what are the prospects for the economy. Our main concern is that the economy is being kept artificially afloat by government borrowing and whilst this has stabilised the trading conditions for most small businesses, there could be another recession around the corner once the impact of post budget government cuts start to bite.

One frightening statistic is the forecast reduction in gross investment net of asset sales from £69.5billion in 2009/10 to £47billion by 2014/15. This affects us all because whilst only a few businesses work on major government contracts, the money filters down through the supply chain to all of our customers in one way or another. This in turn reduces demand and increases supply for all goods and services so its unlikely that belts will be loosened soon!

Throughout this guide we have included tips and ideas for effective tax and financial planning, but it is important to remember that this planning should be an ongoing, year-round process, not something that is left until the last minute.

We can help you to reassess your plans regularly and adapt them as your personal and business circumstances change. With our help, you can plan for a rewarding and financially secure future.

Please note: Throughout the report, 'HMRC' refers to HM Revenue & Customs.

In the 2009 Budget, the Chancellor announced controversial plans to introduce an additional rate of income tax. From 6 April 2010, income in excess of £150,000 will be subject to a new 50% top rate of income tax (42.5% on dividends). There is no change to the tax rates and bands for income of up to £150,000 and the basic personal allowances are unaltered from 2009/10, although individuals with incomes above £100,000 will face gradual restrictions on their personal allowances.

The latest income tax rates can be found on our website.

Provisions restricting higher and additional rate tax relief for higher-earners on pension contributions will continue to operate throughout 2010/11. With effect from 6 April 2011, people with annual income of £150,000 or over but below £180,000 will have their tax relief on pension contributions (including the value of employer contributions for those in employment) reduced gradually from the individual’s marginal rate to the basic rate as income increases. Where income is £180,000 or over, the measure restricts tax relief on pension contributions to the basic rate.

From 6 April 2010 the ISA limit will be raised to £10,200, up to £5,100 of which can be saved in cash. The higher limit was available to investors aged 50 and over from 6 October 2009.

The annual exempt amount is £10,100 for individuals (£5,050 for most trustees) for 2010/11 and the standard rate of CGT remains 18%.

Entrepreneurs’ Relief potentially reduces the effective rate of tax on qualifying gains to 10% and from 6 April 2010, there is an increase in the lifetime limit for Entrepreneurs’ Relief to £2 million. Where individuals or trustees make qualifying gains above the previous £1 million limit before 6 April 2010, no additional relief will be allowed for the excess above the old limit. But if they make further qualifying gains after 5 April 2010, they will be able to claim relief on up to a further £1 million of those additional gains, giving relief on accumulated qualifying gains up to the new limit of £2 million.

The IHT allowance (nil-rate band) has been frozen at £325,000 for 2010/11 to 2014/15. The transferability of the allowance continues to give an effective joint tax-free maximum of £650,000 for married couples and civil partners.

The rate of IHT remains 20% for chargeable lifetime transfers and 40% for death estates (including transfers within seven years before death brought back into the estate for the purpose of calculating the tax due at death).

Corporation Tax rates have stayed at the same level but the Annual Investment Allowance (AIA) will be increased from the current limit of £50,000 to a new limit of £100,000. This will have effect for qualifying expenditure incurred on or after 1 April 2010 for corporation tax and on or after 6 April 2010 for income tax.

A 100% first year allowance will be introduced for business expenditure incurred on or after 1 April 2010 and before 1 April 2015 on new and unused (not second hand) zero-emission commercial vehicles.

There were a range of measures introduced designed to help businesses including:

Help with rates costs for small businesses. The Government is to introduce a temporary increase in the level of small business rate relief, so that eligible small businesses occupying properties with rateable values up to £6,000 will pay no business rates for one year from October 2010. In addition, small businesses benefiting from rate relief taper (rateable values up to £12,000) will receive significant reductions.
A £2.5 billion small business package aimed at boosting skills and innovation
A range of measures introduced to improve online services and reduced red tape for businesses.
4. A relaxation of the conditions for exemption from the chargeable benefit for employer-supported childcare, provided in the form of childcare vouchers or directly contracted childcare.

The taxable petrol and diesel car benefit is calculated using the car's UK list price and applying an 'appropriate percentage' based on the car's CO2 emissions. The car fuel benefit is calculated by applying the same percentages to the fuel multiplier, which for 2010/11 increases from £16,900 to £18,000.

The percentages are reduced for cars that can be driven on alternative fuels.

For cars which cannot produce CO2 engine emissions under any circumstances when driven, the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil.

With effect from 6 April 2011, the list price cap of £80,000 is being withdrawn. This will increase substantially the tax charge for drivers of very expensive cars. For example for a car with a list price of £170,000 and CO2 emissions of 320g/km, the annual taxable benefit will increase from £28,000 to £59,500.

For each of the two next tax years, the CO2 emissions thresholds will be shifted down.

Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must continue to account for output VAT on a scale charge basis.

Changes to the HMRC business mileage rates are announced from time to time. The rates at the time of the Budget are as follows:

The fuel only advisory rates relate to company cars only. They can be applied as a tax-free maximum rate for employees claiming for petrol used on business journeys and for employees reimbursing their employers with the cost of petrol used for private journeys.

HMRC will consider claims for a higher maximum rate, if it can be demonstrated that it is necessary for an employee to use a car with higher than average fuel costs.

The taxable benefit for the unrestricted private use of vans is £3,000. There is a further £550 taxable benefit if the employer provides fuel for private travel. The flat rate of £3,000 is reduced to nil for vans emitting zero CO2. There will be no fuel benefit for such vans.

The standard rate of VAT returned to 17.5% from 1 January 2010.  The flat rates were amended on 1 January 2010 to take account of this change.

Those with an annual turnover of £100,000 or more (exclusive of VAT) on 31 December 2009 will be sent a letter from HMRC. This letter will explain that VAT returns must be submitted online and paid electronically for all returns starting on or after 1 April 2010. There will be a guide with the letter, which explains how to register and enrol for VAT online services. The requirement to submit VAT returns online and pay electronically also applies to those who register or should have registered for VAT on or after 1 April 2010, regardless of turnover.

A higher SDLT rate of 5% will be introduced for purchases of residential property where the consideration exceeds £1 million and the effective date of sale (normally the date of completion) is on or after 6 April 2011.

Relief from SDLT will be available for purchases of residential property valued up to £250,000, where the purchaser or all the purchasers are first time buyers and intend to occupy the property as their only or main home. The new relief will apply to purchases made between 25 March 2010 and 25 March 2012.

The Government has announced that the NMW rates will increase from 1 October 2010.

The current NMW is £5.80 per hour for those aged 22 and over.  From 1 October 2010, 21 year olds will be included in the main adult rate, which will rise to £5.93.

HMRC recently created a new enforcement team with the principal aim of cracking down on employers who are failing to pay their employees at the correct NMW rates. The Dynamic Response Team will concentrate on the most complex and high profile cases.

In his 2008 Pre-Budget Report the Chancellor announced that the main NIC rates would be increased by 0.5% for 2011/12. In his 2009 Pre-Budget Report he announced a further 0.5% increase effective from 6 April 2011, taking rates to:

With effect from 6 April 2011, the primary threshold and lower profit limits were to be broadly aligned with the income tax personal allowance. It has been announced that these thresholds will be increased by a further £570 to compensate the lowest earners (up to £20,000) for the increase in Class 1 and 4 rates.

As always, a number of measures were announced to tackle tax evasion or avoidance including:

PAYE schemes. Legislation will be introduced in Finance Bill 2010 to allow HMRC to require a financial security from employers where amounts due under PAYE or NICs obligations are seriously at risk. This is likely to affect those employers who have a history of serious non-compliance in terms of paying late or not paying. The amount of security will be set by HMRC in light of the potential tax liability.
Increased penalties for offshore tax evasion. Legislation, to apply for tax periods commencing on or after 1 April 2011, will be introduced in Finance Bill 2010 to provide for larger penalties for taxpayers who fail to provide a full account of their income tax or capital gains tax liabilities, where the failure is linked to an offshore matter
Transactions in securities. Legislation will be introduced in Finance Bill 2010 to replace the existing transactions in securities legislation with clearer legislation targeted more effectively at arrangements involving income tax avoidance.
4. Loans to participators. Legislation will be introduced that will deny a corporation tax deduction for the amount of the release or write-off of a loan or advance of money made by a close company to a participator (or an associate of a participator). This has effect for debt (or part debt) releases or write-offs on or after 24 March 2010.