Pre-Budget Report 2008 - Main Points

Here are the main small business points from the Pre-Budget Report. In the most political budget statement for years, the Chancellor announced a series of tax-cutting measures, but there will be a massive price to pay in terms of future borrowing. We will shortly publish expert reaction to the PBR and what it really means for the country.

Main Points

1. The main rate of Value Added Tax will, from December 1st, be reduced from 17.5% to 15% until the end of 2009.

2. Deferral of the increase in the small companies’ rate of corporation tax. The rate will now stay at 21%, instead of rising to 22% from April 2009.

3. National Insurance rates will increase by 0.5% from 2011 - for both employers and employees.

4. A 45% rate income tax band will apply to salaries of £150,000 and above from after the next General Election.

5. The £120 rebate for basic rate taxpayers - introduced after the "10% rate fiasco", will remain and will be increased to £145 from April 2009.

6. The so-called "income shifting" legislation will not, after all, be included in the Finance Act 2009.

7. A new Small Business Finance Scheme to support up to £1 billion of bank lending; a separate £1 billion guarantee facility to support bank lending to small exporters; a £50 million fund to convert businesses’ debt into equity; and a £25 million regional loan transition fund.

8. Introduction of a new HMRC Business Payment Support Service to allow businesses in temporary financial difficulty to pay their HMRC tax bills on a timetable they can afford.

9. Changes to the taxation of foreign profits - including the introduction of a foreign dividend exemption for large and medium-sized businesses, supported by a worldwide debt cap on interest.

For full details of the PBR, visit the HM Treasury website here.