Tony Bryer wrote:

Screw the small one who has no intention of growing. Those who are
retaining profits to grow their businesses and/or strengthen their
balance sheets are less or not affected. IMO what he did was much more
sensible than the alternatives of removing the 0% band which would have
hurt small companies that want to grow or imposing NI on dividends

I think that is a red herring they would like you to believe... but like
most of these things does not stand up to scrutiny.

The 0% band probably made for good sound bites, but was never an
incentive for a small business to invest. It was only ever of any use
for extracting profits. Especially if you were a small sole trader - you
could incorporate and then get 10K out of the business free of
corporation tax.

When you think about it, you only pay CT on profits. Profits are what
are left _after_ all expenses have been paid for. Hence all investment
for growth is already fully tax deductible for a business - so saying
that there is a 0% band for the first 10K as an incentive to growth is
nonsense. This suggests one of two things: either GB does not have a
clue how businesses actually work, or it was part of a bigger plan to
herd businesses into incorporation for whatever reason. The first is
possible perhaps - not sure if he has ever run a business - but seems
unlikely since he is supposed to be pretty sharp. Which kind of leaves
the second as the more likely option.

which would have been quite unfair on businesses like mine which pay
their directors (me in our case) a proper market salary and pay
dividends out of true profits.

Granted the 19% move is far less damaging than a good number of the
options that could have been introduced, perhaps not surprising as there
will be an election soon ;-) There is always the possibility of more to
come however! In reality it is just a patch to fix the problem he caused
himself with the introduction of the 0% band.


--
Cheers,

John.

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