The £7,000 subscription limit on Isas is being kept for a further year to encourage more investors. ...
The £7,000 subscription limit on Isas is being kept for a further year to encourage more investors. The previously-planned reduction in the Isa limit to £5,000 will be deferred, giving people the opportunity to save more tax free.
The Chancellor made his announcement as Inland Revenue figures showed that around £17.3bn had been put into Isas during the first nine months of the current tax year. This is an increase of around 40% on the estimated £12.2bn put into Peps and Tessas in the same period last year.
l The new starting rate of corporation tax of 10% will be introduced as planned from 1 April. Around 270,000 companies will benefit from this halving of the existing rate. The measures introduced this year, together with the 3p cut in small company rates already announced, will cut corporation tax bills of small businesses on average by 25%.
l The existing first year allowances for investments in plant and machinery by small and medium-sized businesses will be replaced by permanent first year allowances at the present rate of 40%.
l The Inland Revenue will extend the quarterly PAYE scheme to benefit an additional 40,000 employers. The threshold for quarterly payments will be raised from £1,000 to £1,500 a month, saving employers up to £150 a year on administration costs. An additional 80,000 small employers will benefit from this change.
There will be an increase in the VAT registration and deregistration thresholds from 1 April 2000. By raising the VAT registration threshold to £52,000, the burden of VAT on small businesses is eased, so encouraging their start-up and growth. The deregistration threshold is being increased to £50,000. The increase will maintain the value of the thresholds in real terms and they will remain amongst the highest in Europe.
l Enterprise Management Incentives (EMIs) will enable young growing companies which may not have the cash flow to give adequate incentives to their employees, and to recruit and retain more people.
The number of employees who can be granted EMI options will now be 15, rather than the initial limit of seven. Companies can grant each of their key employees options worth up to £100,000, normally without any income tax or national insurance charge. Moreover, when the shares are sold, capital gains tax taper relief will normally start from the date the options were granted.
l Changes announced to the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme will reduce from five to three years the minimum period for which investments must be held if they are to qualify for income tax relief under the schemes, make it easier for EIS investors to invest alongside venture capital funds, prevent tax reliefs under both the EIS and VCT scheme being put at risk if the company in which an investment has been made goes into receivership and safeguard VCT investors' reliefs where a company in which the VCT has invested is sold, merges or undergoes a capital reconstruction, and the VCT receives shares rather than cash.
l A corporate venturing scheme has been set up to allow companies which invest in the shares of small higher risk trading companies to obtain corporation tax relief on those investments, defer tax on capital gains that arise by reinvesting within the scheme and set off capital losses against income.
l R&D tax credits will be available from 1 April. Relief for current spending on qualifying R&D will be increased from the existing 100% to 150%; so for every £100 a company spends on this R&D, it can claim £150 against its taxable income. Under this enhanced relief the cash cost of R&D will be reduced by 30% for a company paying tax at the small companies' rate. Companies that are not yet in profit can take the relief up front and reduce the cash cost of their R&D by 24%.
l Small businesses that invest in information and communication technology equipment (computers, software and internet-enabled mobile phones) over the three years from 1 April 2000 will be able to claim 100% first year capital allowances.
A £60m package will help small firms get on-line and deliver services on-line has been put together.
This includes £20m for a new call-centre and web-based advice and information services, £10m for a major boost to advice and training for small firms on using IT and £30m to build a secure infrastructure for electronic communications between government, business and citizens.
From 1 April 2000 it will be possible for companies to transfer assets on a no gain/no loss basis in a wider range of circumstances than is possible under the current rules. Companies are presently able to transfer assets from one to another on a no gain/no loss basis when they are members of the same group of UK-resident companies. In future, membership of a group will no longer be restricted to UK-resident companies. Provided the assets remain within the scope of corporation tax on chargeable gains, no gain/no loss transfers will be possible within the world wide group of companies.
l From 1 April 2000, it will be possible to establish a group or consortium for group relief purposes through a company resident anywhere in the world. The changes completely remove any restriction on the residence of companies through which a group or consortium is established. Group relief will also be extended, from 1 April 2000, to UK branches of overseas companies. A UK branch of an overseas company will be able to claim losses surrendered by other group companies as group relief, to reduce its profits chargeable to corporation tax.
l Cleaner and more fuel-efficient cars are to be rewarded by linking the tax charge to the car's exhaust emissions. From 6 April 2002, the Government will base the tax charge on a percentage of the car's price graduated according to the level of the car's carbon dioxide emissions. The charge will build up from 15% of the car's price, for cars emitti
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