24 PET TRADE WORLD MAY 2009www. pettradeworld. com Here is an overview as to how your business will be affected following the Chancellor's Budget Report on 22 April 2009 ? The Business Payment Support Service which helps businesses that are having difficulty meeting payments due to the existing economic conditions, has now been extended to support businesses currently making losses. The extension applies to corporation and income tax. ? The Three Line Account Limit is being increased from the current amount of £ 30,000 for trading or self employment income and £ 15,000 for property income to permanently align it with the VAT registration threshold to £ 68,000 from the tax year 2009/ 10. This is relevant to small businesses who can restrict the information they provide in their tax return to just their turnover, total allowable business expenses, and net profit or loss, rather than having to provide a detailed breakdown of their expenses. ? There is a new temporary rate of 40 per cent for capital allowances - first year allowance for expenditure on general plant and machinery. ? The loss carry- back rules, which were extended in the Pre- Budget Report in November 2009, are to be extended for a further year for both limited companies and the self- employed. ? A package of measures on the taxation of foreign profits by UK companies that are members of groups is being introduced. ? VAT changes to modernise cross- border trading will be introduced over a three- year period from 1 January 2010 and will include changes to the place of supply rules for cross- border supplies of services, completion of quarterly European Community Sales and a new electronic VAT refund procedure for cross- border supplies of services. ? Tax relief on pensions contributions will be restricted to basic rate for individuals with an annual income of £ 150,000 or higher from 6 April 2011. New rules apply from Budget Day ( 22 April 2009) regarding this group making large additional contributions to their pensions. ? The standard VAT rate will return to 17.5 per cent from 1 January 2010. ? Employers need to be aware that from 2010- 11 ( brought forward from 2011- 12) the new additional rate of income tax will be 50 per cent instead of 45 per cent and will apply to taxable income above £ 150,000. This replaces the 45 per cent originally announced. ? There have also been changes to the income- related reduction to the personal allowance from 2010- 11. These changes only affect taxpayers with an annual income of over £ 100,000 for the tax year 2010- 11. ? Corporation Tax rates for the financial year 2010- 11 will remain unchanged with the main rate at 28 per cent and for the financial year 2009- 10 the small companies rate will be 21 per cent. How will the Budget affect your business? BUSINESS ADVICE

www. pettradeworld. comPET TRADE WORLD MAY 2009 25 BUSINESS ADVICE The Budget and company car costs Employees will face greater tax bills on their luxury company cars from 2011. Previously, the list price was capped at £ 80,000. Following last year's pre budget announcement that cars with emissions of 120g/ km or less would attract a scale rate of 10% from 2011 it looked like some company cars would have some unexpected tax breaks. For example, Bentley were predicting that all their models would meet this limit by that date, several top executives seemed to be in line for a tax reduction. From 2011, HMRC will scrap the £ 80,000 list price cap which will not only mean higher costs for employees but also higher national insurance costs for employers. Those executives who are currently enjoying the benefits of the list price cap, could easily see their tax bill increase considerably and it is possible that it could double depending on the model. The Department for Business is considering using an existing £ 10billion working capital guarantee fund to improve the availability of letters of credit to overseas companies to buy goods and services from UK companies. It is also assessing whether to launch a government- funded export credit insurance service to tackle what officials see as a market failure caused by the collapse of market leader AIG. Business groups said that exporters had to be supported. David Frost, director general of the British Chambers of Commerce, said: " When global trade starts to expand business needs to be in a position to take advantage of this. Much greater focus will need to be paid to exports and this boost reverses cuts in the trade promotion budget seen over recent years." UK Trade and Investment minister Lord Davies said that the additional funding, representing an 5pc to its existing budget, would enable the agency to help more businesses. " This money will be well- spent. Independent research shows that every £ 1 spent by UK Trade & Investment generates £ 16 in benefit for the UK economy. We have helped 20,700 firms generate £ 3.6 billion in one year," he said. " What's exciting about this new funding is that we can use it to help British businesses in areas where there is significant growth potential. We want to reach out to high potential firms ." Government crackdown on tax evasion Billions of pounds could be repatriated to the UK after the Government relaxed rules on how profits made overseas by multinationals are taxed. Attempts to tighten rules on tax avoidance have led large multinationals to hold cash offshore because they argue they face a dual tax hit. The issue has been a running sore with businesses for several years and has sparked protests by several organisations, including the Confederation of British Industry. However, in yesterday's budget the Treasury said it had decided to alter the rules and from July dividends on foreign profits will be exempted from tax. Chris Morgan, head of international tax at KPMG, said the change suggested that the Treasury was finally " listening". In his Budget, the chancellor said: " The exemption for foreign dividends will come in as of July this year. This will enable multinationals to repatriate billions of pounds to the UK which would otherwise have been left offshore." Exporters given help to increase trade in Budget 2009