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The Emergency Budget: All The Key Points For Businesses

London, UK (22/06/2010)

LONDON ( Here's a summary of how George Osborne's plans will affect your business.

VAT increased: Tax on most goods and services will go up from 17.5 to 20 per cent from 4 January 2011, but zero-rated items will remain exempt for the next five years. Tax rates on insurance premiums will be raised from 5 to 6 per cent and from 17.5 to 20 per cent respectively.

Corporation tax cut: The smaller company rate of corporation tax is to be cut from 21p to 20p in the pound. Larger companies are being treated more generously, with the current 28p rate to be reduced to 24p over the next four years.

National insurance (NI) contributions: Start-ups outside London and the South East will save £5,000 in employers' NI contributions for each of their first ten employees.

Capital gains tax (CGT) to go up: Those who pay income tax at the basic rate will continue to pay CGT at 18 per cent. However, higher-rate taxpayers will pay CGT at 28 per cent.

Entrepreneurs' relief boosted: The 10 per cent rate of CGT that applies to the first £2 million of entrepreneurs' gains over a lifetime will now apply to the first £5 million of those gains.

Enterprise finance guarantee (EFG) extended: The EFG scheme that supports small and medium-sized enterprises' access to bank lending is to be prolonged.

Capital allowances trimmed back: The rate at which tax relief is given for capital spending will be reduced from 20 to 18 per cent, meaning that businesses 'will still receive full tax relief, but over a longer time frame', according to George Osborne. The annual investment allowance will be reduced to £25,000, but 'over 95 per cent' of businesses will still be fully covered for their capital investments.

Duties: there will be no new increases in duties on alcohol, tobacco and fuel. The government will 'explore' changes to aviation tax including switching to a per-plane rather than a per-passenger duty. The previous government's plan to increase duty on cider will be reversed.

New regional growth fund to be established: This fund will support projects in the regions that deliver returns for the Treasury and create jobs, but we'll have to wait for the full text of the Budget to be released to get more details.
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