From a business perspective the emergency budget appears, on the face of it, to have been tough but fair, unless you are in retail or have a Capital Asset to sell!

Of the £40 billion of measures to reduce the deficit, £8billion are from Tax rises and £32billion from spending cuts in the public sector.

The VAT hike to 20% was probably unavoidable. This will possibly hurt retailers and put pressure on employers to increase wages to compensate, a measure that will not happen in the public sector where pay has been frozen.

Businesses that do not supply direct to the public and are below the VAT threshold should seriously consider registering for VAT, saving 20% on their business purchases.

Running a small business has many rewards, but it also has many pressures and reducing the Corporation Tax percentage is a very welcome measure.  Now a small business can look at going back to a rate of 20% rather than 22% as proposed by the previous government.

Capital Gains Tax has been hit with gains for higher rate Tax payers being charged at 28%. This will affect people with second homes, rental properties, Share Portfolios. Maybe the use of Limited Companies for Rental properties in the future is a good option in terms of Tax?

Capital Allowances have been played down in this budget, but a reduction from 25% in previous budgets to 20% was tough enough but to reduce this to 18% is hard for companies trying to invest in equipment.  The Chancellor said that this brings Capital Allowances in line with depreciation. The Annual Investment Allowance will be cut to £25k. for businesses investing in plant and machinery in excess of £25k do it this tax year, as the £100k will disappear on 5 April 2011.

It appears that our area does not get the employers nic incentive for new start ups, this seems unfair as we all pay the same tax, wherever we are in the country!

Commitment for the lower paid to not pay tax over £10k of income has started with a rise in personal allowances by £1k from 6 April 2011, for businesses employing part time staff this is a welcome move.

Many of the measures do not take effect until next year and the VAT increase will be the hardest tax for most of us not connected to the public sector.

If you would like to discuss how the budget will impact on your business or personal circumstances please call Paul Donno on 01787 281688.

Read our comprehensive report on the Emergency Budget.