IT Contractor Tax Limited Company Accounts Accounting

Following one of the most fascinating elections in memory, and with the UK now run by a Conservative / Liberal Democrat coalition, many of us will be wondering how the new government will treat small businesses and contractors in particular.

Clearly, with such a monster deficit to tackle, tax breaks will not be a priority for the new administration, but with the Conservatives' tradition of providing a low-tax and regulatory business environment, it may not be all bad news when the new Chancellor delivers his 'emergency budget' this summer.

Looking at the manifesto pledges of each party in the coalition, and based on the information gathered over the last few days, we may expect to see the following changes take effect in under two months' time, if not before:

• Tory plans to implement £6bn in public spending cuts seem likely to proceed.


• The new Government is likely to cut the main rate of corporation tax from 28p to 25p, and the small companies' tax rate to 20p - a key pledge in the Conservatives' manifesto.


• The Tories have proposed to simplify business taxes, via the creation of an Independent Office of Tax Simplification. This will include a review of IR35. Many Lib Dems (including Vince Cable) signed an EDM in March 2009 calling for the abolition of IR35.


• The Tories have proposed to reduce the number of forms needed to set up a new company, and the general red tape burden all businesses have become accustomed to since 1997.


• The Tories have said that they do not regard the 50% tax rate as a permanent fixture, but it is unlikely to be removed during a time of cuts elsewhere.


• The Labour planned increase in the NIC rates will not go ahead - both parties have already agreed on this.


• The Lib Dem proposal to raise the personal allowance to £10,000 seems to have been adopted by the coalition, but it will need to be funded by significant cuts elsewhere.


• It is widely believed that the rate of Capital Gains Tax (CGT) will rise substantially from its current rate of 18%.


• Married couples may still receive an extra small allowance under Conservative plans - the Lib Dems appear not to have objected.


• Tory plans to raise the Inheritance Tax threshold from £325,000 to £1m will almost certainly be shelved, having caused so much controversy during the election campaign.


• The much-derided 'Mansion Tax' on properties worth £2m or more will be scrapped.


• Child Trust Fund vouchers of £500 and £250 could well be withdrawn.


• Most commentators expect to see a quickly implemented rise in the standard rate of VAT.