Small businesses and the pre-budget report

The Pre-Budget Report delivered by Chancellor Alistair Darling included a number of initiatives designed, according to the Chancellor, to help businesses through the recession. Some of these could have implications for the salon sector:

Business payment support service

Cashflow support for businesses through HM Revenue and Custom (HMRC) Business Payment Support Service will continue indefinitely. The service allows businesses to agree more time to pay certain tax bills to HMRC. According to the government's Business Link service, it has already helped more than 160,000 businesses defer tax payments totalling £4bn.

No increase in small companies' tax

The planned increase in the small companies' tax rate will be deferred for an extra year, remaining at 21% until April 2011. The government is also extending its Enterprise Finance Guarantee, with an extra £500m being made available to small and medium-sized business via the scheme.

Encouraging business growth?

New for 2010 is the Capital Growth Fund to invest in small and medium-sized businesses. This isn't for those looking for minor investment funds; this scheme is for businesses looking to borrow between £2m and £10m. The government is currently in discussion with banks as to how the scheme will work and a further announcement will be made early this year.

Taxing times

As of 31 December 2009, the rate of  VAT has returned to 17.5% The government claims the move is part of its plans to halve the level of public borrowing as a share of the economy over four years.

There will also be a 0.5% increase in the rate of employer, employee and self-employed National Insurance contributions.

More people in employment?

In a bid to reverse the unemployment situation, the government is offering a guarantee that every 18-24 year old who has been claiming Jobseekers Allowance for six months will be offered a job, training or work placement lasting at least six months.

Another 'back to work' initiative will see the introduction of the Better Off in Work Credit, providing a top-up payment to benefit claimants whose income from work is not £40 greater than their benefit income.