We received a petition asking:
“We the undersigned petition the Prime Minister to re-introduce the zero-rate corporation tax band for the first £10,000 of company profit.”
Details of Petition:
“Up to 2006, the first £10,000 of a company’s profits was zero-rated for Corporation Tax purposes. This band was scrapped by the then Chancellor, Rt Hon Gordon Brown and has had a major adverse effect on all companies but, in particular, small companies. Whist the Government is ‘encouraging’ banks to help those companies with borrowings, what about those companies who, through prudence, have little or no borrowings? With the prospect of reduced sales turnover and increasing margins, it is desperately important for small companies to ratain what cash they can. Many, otherwise, are likely to run out of cash and go under. The re-introduction of this zero-rate band would seem to be a simple change to the tax system, be enormously helpful to a significant number of small companies and be welcomed by the population generally as a Government-inspired idea further to support the small business community.”
· Read the petition
· Petitions homepage
Read the Government’s response
The starting rate of corporation tax for profits up to £10,000 was first introduced in the Pre-Budget Report (PBR) 2000 at 10 per cent and reduced to 0 per cent at Budget 2002. However, due to the rise in tax-motivated incorporation and its associated risk to the Exchequer, at the PBR 2005 the Government removed the starting rate to maintain a tax system that is fair to all.
At 21 per cent the small companies rate remains highly competitive internationally with by far the highest threshold across the G7, at £300,000.
The Government continues to support businesses during this difficult time. The 2008 Pre-Budget Report launched HMRC’s new Business Payment Support Service to offer help to businesses facing temporary financial difficulties to spread tax payments over a timetable they can afford. In total, by 19 April 2009, the service had helped over 100,000 businesses, who collectively employ over 600,000 people, spread tax payments worth almost £2 billion. This has included corporation tax, VAT and payroll taxes including employers’ National Insurance Contributions. Support has been provided across UK regions and sectors. HMRC will continue to offer this service for as long as it is needed and, from 22 April 2009, this service was expanded to allow businesses expecting to make losses to offset these against tax bills due on profits from the previous year which they are unable to pay.
Budget 2009 also announced further targeted measures that will help businesses’ short-term cashflow, including:
• further support to loss-making businesses, by extending the enhanced loss relief announced in the 2008 Pre-Budget Report for an additional year;
• enabling businesses to spread payment of this year’s inflation up-rating to business rates over three years, as announced on 31 March 2009;
• a ‘top-up’ trade credit insurance scheme to help businesses maintain their finances, in which Government will offer to match private sector trade credit insurance provision, for a temporary period, if insurers reduce cover to any UK business; and
• for a temporary period, a vehicle scrappage scheme, co-funded with industry, that will enable consumers who scrap vehicles older than ten years to replace them with new vehicles at a discount of £2,000.
Budget 2009 also announced a package of measures that will support the adjustment towards renewed economic growth and improve the UK’s competitiveness, offering:
• an increase in capital allowances for new investment to 40 per cent for one year, with effect from April 2009, to allow a higher proportion of private investment tobe offset in that year against taxable profits; and
• a £750 million Strategic Investment Fund to support advanced industrial projects of strategic importance.
delicious
digg
facebook
