The can be no doubt that the future prospect of businesses are determined by the political thinking of the day. Here in the UK, after 13 years of Labour rule, we are about to take a sharp turn in a new direction. On June 22 an emergency budget will be presented by the new government.
For those looking to the UK to create new business the headline rates of corporation tax and income tax are easy to see. What is not easy to see has been the continuous changing of the law to reverse the “perceived” loss of tax from people following the advice of clever accountants. Two situations come to mind.
To pay income tax in the UK you have to be resident here. The rules about residency are too complex to discuss in this blog, if you want to know more email me, but one of the rules said that you were resident on the day of arrival and not on the day you left, or visa versa, I can never remember. To get around this rule the wealthy business owners who live abroad, would fly in and out on the same day. So the rules were changed to stop this “abuse.”
In the early 2000’s the tax rules governing the use of a limited company were changed to make incorporating even the smallest of business very tax effective. Millions of business converted themselves into a limited company. In response Gordon Brown, brought in even more rules to make those who promoted and prospered from this rush to form limited companies personally liable to for the tax lost. The first cases are being heard in the courts in the coming weeks.
The new coalition government is to have its first emergency budget on June 22, an easy date for me to remember, it is my birthday. The indications are that many of these crazy rules will be reversed, so if you have clients or business here in the UK then June 22 is a day to mark in your calendar, a time for review.
My country is spending £5 for every £4 it receives. Not a viable situation, and so there will have to be significant changes in government spending and new tax rises coming through. Tax payers from overseas are a wonderful target, for the simple reason they cannot vote! So after June 22 it will be very important to see how the situation has changed for you, and your clients.