Pre Budget Report 2008 - Business Taxation

The Chancellor, Alistair Darling, in his Pre Budget Report speech given on 24 November 2008 outlined various measures being introduced to help businesses during this time of current financial instability. He also clarified the position on Capital Allowances on cars which had been under review.

Corporation Tax

The planned increase in the small Companies Rate of Corporation Tax from 21% to 22% has been deferred from 1 April 2009 to 1 April 2010 in a bid to ease the burden on the smaller business.

Trading Losses

In an attempt to help businesses which find themselves making losses, all companies and unincorporated businesses making losses from carrying on a trade will temporarily be able to carry back losses for up to 3 years.

At present losses can only be carried back to the preceding year and this remains unchanged. As a temporary measure businesses will be able to carry back any surplus losses up to a maximum of £50,000 to earlier years.

For companies the above applies where their accounting periods end between 24 November 2008 and 23 November 2009. Unincorporated businesses can relieve losses incurred in their basis period for the tax year 2008/09.

Cars

Details of the new rules for Capital Allowances on cars have been announced. For cars bought after March 2009 allowances will be based on CO2 emissions. Cars with a CO2 of 160g or under will qualify for 20% allowance each year, cars above 160g CO2 will only have an allowance of 10%. Cars bought before the change will remain in their pools and qualify for 20%.

There will also be a change in the rules for leasing "expensive" cars. From 1 April 2009 on all leased cars above 160g CO2 15% of the lease costs will not be allowable for tax. There is no add back for cars under 160g CO2.

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