BizSale Small Business Blog. Small businesses for sale.

Don’t think that Alistair’s partial u-turn on CGT means that small businesses are being treated well by this government.

In each of the last three budgets, the government has steadily added to the tax burden of small businesses, and lightened the load on larger corporations. Take a look at this illustration:

Profit (net and pre-tax): £11,000

Fixed assets brought forward: £6,500

Depreciation at: £1,625

In 2010, the corporation tax for this business will be: £2,228

Compared to their corporation tax total in 2005 of: £184

Wow! That is an increase of over 1000 percent!

If you applied a similar tax calculation for a business 1000x larger, you would see that their tax bill actuall REDUCES by over 2% over the same time period. See the actual figures over at Figurewizard.com (thanks Joe for that).

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Alistair Darling, the UK chancellor has finally made up his mind on the new capital gains tax regime due to take effect after April 5th this year, and announced a major concession for owners of small businesses.

Any business owner making a profit of one million pounds or less on the sale of his or her business will only be liable for CGT at 10%, rather than at the previously proposed rate of 18%. The 18% rate will apply to all gains above the million pound mark, however.

For once, it seems the Chancellor has actually listened to some of the business community. Business groups were united in their dismay at the proposed tax changes. Although many medium to large businesses are not so impressed with today’s announcement, many small business owners are breathing a sigh of relief.

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