As you are probably aware, the standard rate of VAT will be reduced to 15% from the 1st December 2008. This means that from this date the standard rate of VAT you apply to your sales to customers is 15% instead of 17.5%. NB The VAT fraction will be “3/23” for calculating tax from the gross value. This means that if you multiply the gross payment by 3/23 or 0.130434 you will arive at the amount of VAT. i.e. £100 Gross x 0.130434 is £13.04 and a net price of £86.96. These changes need to be made before invoices are rasied on Monday 1 December 2008 Sage 50 users click read more to learn how to change your SAGE settings.

The chancellor has announced his pre budget report. The main tax changes and how they will affect individuals and businesses are outlined in this article:-

I attended and presented at a seminar this morning run by Innovation Lincolnshire about innovation and doing things differently. We talked about a lot of issues as a group and decided that actually whilst there are many definitions for innovation it can actually mean doing things differently. I talked in my presentation about HMRC’s Research and Development Tax Credit and Tax Relief system and as promised to the attendees I have attached an article I wrote for the Lincolnshire Echo below:-

The announcement by the government to compensate UK taxpayers for the abolition of the 10p income tax rate has been described as a huge "U Turn" by many media commentators but what does it mean? The personal allowance for the tax year 2008 - 2009 will be increased to £6,035 from £5,435, a compensation equivalent to £120 for each basic rate taxpayer. There is no increase in the amount of tax higher rate taxpayers are liable to pay. The threshold limit, however, for the higher rate band has been reduced from £36,000 to £34,800.

Chancellor Allistar Darling has announced changes to his initial Pre Budget proposals for Capital Gains Tax reforms. In his Pre Budget report Darling shocked the Business Community with proposals to abolish the taper relief system and charge all capital gains at 18%. This would mean that business owners disposing all or part of their businesses would suffer from an increased tax charge of around 8%. The proposals have lead to an increase across the UK in Merger and Acquisition activity as business owners have attempted to dispose of their assets prior to 5 April 2008. After a number of months of intensive lobbying Darling has now announced major changes to his proposals. He has introduced a new £1M lifetime allowance as part of a new Capital Gains Tax Entrepreneurs Relief. Capital gains on the disposal of a trading business, trading partnership or trading company (providing that the shareholder has a stake of at least 5%) that exceed the annual exemption but not £1M will be taxed at 10%. Any gain above this amount will be taxed at 18% as in the original plans. In addition no changes are to be made to the CGT annual exemption or to EIS, VCT and rollover reliefs. These changes are also likely to benefit venture capitalists, business angels and anybody else who has a 5% stake or more in a company. It may be still advantageous for some business owners to dispose of assets prior to the changes coming into force if they have owned the assets for a long time as indexation will be abolished