BUDGET REVIEW

Business Rates and Stamp

Duty Alistair Darling’s last budget before the General Election is likely to have a modest impact overall on the property industry but did include positive to steps for small businesses and first time buyers.

Business Rates

The Budget has introduced a Business Rates saving for all small businesses who have a Rateable Value from 1st April 2010 of £12,000 or below.

Current Small Business Rate relief applies to those businesses with Rateable Values below £18,000 whose rates are calculated on a lower multiplier. In addition, businesses with an assessment below £6,000 the rate bill is reduced by half and for those between £6,000 and £12,000 there is a further sliding scale discount.

In the Budget, however, businesses with a Rateable Value of up to £6,000 will be entitled to 100% relief on their rates bill and for those with a value between £6,000 and £12,000 there will be a sliding scale of further reduction between 0% and 100%. This relief will apply for a period of one year commencing 1st October 2010.

Whilst only operating for a year, this additional discount will be of significant help to the large number of small businesses that operate in the West Country.

Stamp Duty

New relief for Stamp Duty Land Tax for residential properties has been brought in with immediate effect for qualifying first time buyers who will no longer have to pay any Stamp Duty on a property purchase up to the sum of £250,000 for a period of two years. Qualifying first time buyers are a first time buyer either by themselves or with a partner/partners who have not previously purchased a property any where in the World, though it is unlikely that there will be any significant checks to verify this, only to require completion of a simple declaration.

The average age of a first time buyer is now surprisingly 38 and there are likely to be many genuine first time buyers who may be excluded by virtue of having possibly had an interest perhaps in an overseas property or with a former partner or spouse which would now disqualify them from this additional relief.

The ‘sting in the tail’ is that Stamp Duty for residential property at over £1m increases from 4% to 5% which is a significant increase and will have a major impact on buyers particularly in London and the South East.

Inheritance Tax

The Inheritance Tax Band level remains at £325,000, fixed for 4 years which is disappointing given pre-election gossip that the threshold was going to be increased.

As with any Budget, the devil is in the detail and the fine print. There are numerous areas which small businesses and property owners need to be aware of particularly changes on capital allowances on plant and machinery, changes in allowances for green technology and, of course, we suffer the proposed increases that have already been announced for National Insurance Contributions and an increase in smaller company’s Corporation Tax.

For further advice, particularly on changes to the Rating Assessment, please contact Neil Sargent or John Richomme at the Truro Office.

Neil Sargent

Chairman/Commercial Director