News

The UK Government has introduced a new and very valuable incentive aimed at encouraging new companies to start up in the UK outside the area of London, the South and the South East of England.

With effect from 6th September 2010, and continuing until 5th September 2013, newly established businesses (including all those at the EBS and University of Warwick Science Park offices) can receive a holiday from the first GBP 5,000 of social costs paid to the first 10 employees who start in the company for the first 12 months that they are employed.

The Government has released more information on it’s website.

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Our latest newsletter includes items on incentives for new businesses, the increase in UK VAT, and the new UK Market Access Program.

The rate of VAT in the UK will increase from 17.5% to 20% for all transactions taking place on or after 4th January 2011.

For more information on VAT in the UK, please see our VAT Quick Facts sheet

The following seminars are planned for 2011:-

May 24th: Aarhus
September 11th: Seinäjöki in partnership with Seinäjöki Science Park

Please contact Martin Williams to register.

The UK has its first real coalition government since the end of the second World War. It is also the first government in modern times to have a fixed term, in this case 5 years. An extra Budget, which is the financial statement for the UK, was announced on Tuesday 22nd June in response to the financial difficulties that all countries find themselves in.

This has been a difficult time. It is important that the UK has a strong and effective government which can steer the economy and has the authority to bring about the changes which it wants. It would seem that the Conservative Liberal Democrat coalition now has the authority which it needs, and the courage to make difficult decisions.

There will be a Public Spending Review, the results of which will be announced in the autumn, but it is widely expected to produce significant cuts in public spending.

For those still in any doubt, it has already been announced that the Government Department with responsibility for ensuring that UK is ready to join the Euro, and which has been in existence since 2000, will be closed as part of these cuts.

The Budget is positive towards EBS clients, with reductions in company taxes and social costs as well as incentives for newly established companies to create jobs.

The main points of the Budget are:

VAT up from 17.5% to 20.0% from 4th January 2011

Company Taxes The main rate of Corporation tax (for companies with profits over GBP 300000) will reduce from 28% to 27%from 1st April 2011, and go down a further 1% in each of the next three years to be 24% by 1st April 2014. The small companies rate, which is the rate most of our clients’ pay, will be reduced from 21% to 20% from next year also.

Social costs. The free allowance of social costs for employers will increase by GBP 1092 per year from next year.

Social cost relief for new companies. It was announced that any new company formed after 22nd June 2010 will not have to pay the first GBP 5000 of Social Costs due in the first 12 months of employment. This will apply to each of the first 10 persons employed during a three year period. The scheme will start in September but any company which meets the requirements and is established after 22nd June will qualify. Further details will be announced later.

Income tax. The tax free allowance on personal incomes will increase by GBP 1000 to GBP 7475 next year. This will take nearly 1 million people out of paying Income Tax and make a significant reduction in the costs of administering the tax.

Capital Gains Tax. The rate of 18% on non business assets will remain the same for standard rate tax payers. From midnight 22nd June it will rise to 28% for higher rate tax payers. This is designed to close the gap between income and capital tax rates and reduce the incentive for those who can to switch profits between the two.

Entrepreneurs relief, which sets the rate of Capital Gains tax at 10% for business assets for the first GBP 2 Million of gains during a persons lifetime is to be extended to the first GBP 5 Million.

Public sector pay will be frozen at present levels for the next two years for all those with salaries of GBP 21000 per year or more.

Personal consumption. There will be no increases in alcohol or fuel duties.

Social benefits. There will be changes to the social benefits system to make it easier to understand. Some benefits will be withdrawn from higher earners, and some social benefits will be cut or frozen in order to discourage benefit dependency.

Royal Family. The amount paid to the Queen and other members of the Royal Family for her public duties, known as the Civil List, is revised every 10 years and is due for review this year. The current payment has been frozen for one more year.

Bank tax. In cooperation with France, Germany and other European countries, the UK announced a tax on the assets of banks to be implemented next year.