New Business Regulations for 2008

With the start of a new tax year, small businesses should prepare themselves for a raft of new Government regulations and tax changes. Inspired by a checklist supplied by the Forum of Private Business, we've outlined the main changes for 2008 below, with links to further information on the Bytestart site. You may also be interested in an article written by Eversheds - New laws for 2008 every employer should be aware of, here.

Corporate Manslaughter Act

The Corporate Manslaughter Act, which comes into force on 6 April, creates a new offence of corporate manslaughter (corporate homicide in Scotland). For the first time, should there be a work-related fatality, the burden will be on firms to prove that they had in place the correct health and safety procedures, and did not breach any duty of care owed to the deceased. Businesses, which could be publicly named and shamed, and fined up to 10% of their annual turnovers, are advised to review their health and safety systems and practices. Read more about the Corporate Manslaughter Act.

Corporation tax

Smaller firms’ tax contributions is set to increase, while the rate paid by bigger businesses is being cut. The main (higher) rate of corporation tax will be slashed from 30% to 28%, whilst the lower rate will go up to 21% by April 2009. See our guide to corporation tax for more details.

Tax credits and allowances

There will be an increase in research and development credits, and a new annual investment allowance applicable to businesses of all sizes (replacing first-year allowance schemes available only to small and medium-sized firms). In addition, payable enhanced capital allowances may apply on certain losses. For more details, read our capital allowances guide.

Pay As You Earn (PAYE) and National Insurance (NI)

There will be changes to PAYE and NI rates and thresholds. From April, only two PAYE rates will apply – a basic rate of 20% and a higher rate of 40%, applicable to earnings over £34,600. You can access full tax rate and allowances tables in our dedicated tax rates section.

Empty property relief

Business owners with property that has been empty for three months or more (six months in the case of industrial property) will have to pay full business rates.

Information and Consultation of Employees (ICE Regulations)

For the first time, these will apply to organisations with 50 or more employees. There is no automatic requirement to have an I&C agreement, but if 15 or more employees request one, businesses will have to agree to their request. Read an interesting Business Link article here.

Occupational pension schemes

Similarly, occupational pension schemes will be extended to organisations with 50 or more employees.

P46 and P45 requirements

From 6 April, all new employees, other than pensioners, will be required to submit additional information about themselves. In addition, from 6 April, employers at large and medium-sized businesses will have to electronically file Parts 1 and 3 of P45 forms.

Agency workers

Agency workers will be protected by new rules from 6 April. These rules will particularly affect agencies and their clients in the entertainment and modelling sectors. In other sectors, where accommodation and transport form part of the work agreement, an employer will be committing an offence by making an offer of work conditional on a worker using and paying for such services. These rules give workers the right to opt out of services they do not require. Read more on the Agency Workers Directive.

Sex discrimination, maternity and paternity rights

The harassment test will change from unwanted conduct ‘on the grounds of sex’ to ‘related to her sex’. It will cover a wider range of conduct because the harassment is only required to be related to a victim’s sex, not directly caused by it. The definition will include many ‘jokes’, such as those about mother-in-laws and women drivers.

Employers will be liable for sexual harassment of employees by third parties, not just other employees.

The difference in the treatment of Ordinary Maternity Leave and Additional Maternity Leave for terms and conditions will be removed. The Government estimates this will cost employers £156 million.

Business-to-business marketing

This will be regulated under new rules that will make misleading advertising unlawful. There will also be restrictions on the use of comparative advertising for all businesses, particularly those operating in retail, advertising and marketing.

Protecting consumers

There will be a crackdown on a number of practices in order to protect consumers from unfair treatment, including misleading or aggressive sales activities. Every area of trade and advertising will be affected, from doorstep to high street to online sales.

The Companies Act 2006

This will reduce some of the burdens on private companies. They will no longer be forced to appoint a company secretary, or have the signatures of two directors to execute deeds (one director’s signature before a witness will suffice). However, new auditing rules will be imposed, including those pertaining to an auditor’s resignation. Read more on the Companies Act 2006.

The definition of small companies and groups

These will be redefined by new thresholds for turnovers and balance sheets. Businesses will have the option of adopting fair-value accounting. They will have to also make certain changes in their accounting and auditing practices, particularly with regard to listing directors' pay.