The Budget: what businesses want

George OsborneBritish companies of all sizes are waiting impatiently to hear what the Chancellor George Osborne has to say on Wednesday.

Here, we take a look at how UK businesses are likely to be affected by the Budget, and whether the measures introduced will be welcomed or not.%VIRTUAL-SkimlinksPromo%

Stories of big businesses avoiding tax have hit the headlines recently, so many forecasters expect the Budget to include measures designed to tackle this problem.

The issue for the Chancellor, however, will be how to do this without prompting large companies to up and leave the UK altogether.

Accountant Grant Thornton's Andrew Westhead therefore believes that a sudden crackdown is unlikely. "The Government wants to turn the screw on larger corporates to cut down on offshore tax planning," he said.

"But the danger here is that by acting unilaterally the UK may lose its competitive edge. International co-operation is a far stronger option and expect to see more news about how that might happen."

Funding for Lending Scheme
The Government's Funding for Lending Scheme (FLS) has been credited with helping more first time buyers on to the property ladder. However, it does not seem to be having the same success at helping smaller businesses.

Changes to the scheme are being predicted as a result, but Gary Edwards, head of asset-based lending at Investec Bank, is concerned that the Government will fail to see where the real problem lies.

"We welcome anything that helps stimulate lending to business, but it's not enough to pump money into the system," Edwards said.

"The big banks are good at lending to established companies with track records and they are also good at lending to start ups, where entrepreneurs put their personal assets on the line to secure the loans.

"Where they don't deliver is in growth companies needing to borrow in the region of £5 million to £50 million." Companies of this kind may therefore be disappointed if the changes do not recognise their plight.

Corporation Tax
There is an expectation that mainstream Corporation Tax will be further reduced to bring the large company tax rate into line with the rate paid by smaller companies.

Should this happen, all businesses would soon pay 20%, something that would undoubtedly please bigger firms.

Westhead said: "We've already seen a further cut announced to the mainstream corporation tax, bringing it down to 21% with effect from April 2014. Could the Budget provide the Chancellor with a chance to marry the small companies' and mainstream rate at 20%?"

Employee share schemes
The Budget looks likely to include several measures regarding employment-related share schemes, which have a proven track record at improving company performance.

Any such changes should get a positive reception from businesses keen to explore this way of incentivising their staff.

Westhead said: "The Government has already announced measures that will make it easier for private companies to repurchase shares from their employees when they leave employment. We expect to hear more about its plans."

Investment tax breaks
The Enterprise Investment Scheme (EIS), which is designed to help small companies raise finance, offers a range of tax breaks to investors in smaller, higher-risk companies.

Jason Hollands from adviser Bestinvest thinks that the Chancellor may extend some of the reliefs available on the EIS, as well as the Seed Enterprise Investment Scheme (SEIS), which was launched this tax year to help start-ups.

"The Chancellor may well want to demonstrate further support for small businesses," Hollands said. "He could extend the reliefs available or widen the eligibility for companies to take part." And that could be good news for both small and medium-sized firms.

Tax tricks to improve your wealth
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The Budget: what businesses want

If you wear a uniform of any kind to work and have to wash, repair or replace it yourself, you may be able to reclaim tax paid over the last four years. For some people, this could mean a windfall worth hundreds of pounds

The interest you receive on savings accounts (with the exception of cash Isas) is automatically taxed at a rate of 20%.

Higher-rate taxpayers therefore tend to owe money on the interest they are paid throughout the year. If, however, you are on a low income or not earning at all, you should be able to claim all or some of the tax deducted back

You can apply for a refund of vehicle tax if you are the current registered keeper or were the last registered keeper of your vehicle that no longer needs a tax disc

If you pay tax on a company, personal or State Pension through PAYE (the system employers use to deduct tax from your wages), you may well end up overpaying

There is a limit to the amount you need to pay in NI, whether or not you work for an employer.

Instances in which you may find that you have overpaid include if you work two or more jobs and earn more than £817 a week and if you move from self-employment to employment, but continue to pay Class 2 National Insurance contributions


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