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Budget 2010: It’s worth retailers reading the small print

26 April 2010

The general view from those in the retail sector at the time was that the 2010 Budget was largely an unhelpful non-event for retailers, with many of the key points on which assistance had been hoped for not being addressed.

However, the dust having settled, it is worth retailers being aware of some of the more low key measures buried in the detail of the Budget which could provide savings. After all, in the current climate every little helps. Here we look at some of those less headline grabbing changes.

Business payment support service

As a result of businesses finding trading tough, HM Revenue & Customs (HMRC) has for the past year been operating a ‘Time to Pay’ facility.

This is not, as businesses could be forgiven for thinking, a ‘pay now or else’ ultimatum issued by HMRC. It is in fact an opportunity for businesses with cash flow difficulties to agree with HMRC to spread payment of their tax bill over a longer period.

Perhaps unsurprisingly there has been a high take-up of this helpful facility. Budget 2010 announced Time to Pay would be extended for the whole of the next Parliament, although there were no specific proposals to do so in the Budget press releases.

Should the Conservatives win the next election, it is likely they would also extend Time to Pay, so businesses should be able to take advantage of this for the foreseeable future whatever the outcome on May 6.

However, following Budget 2010, businesses wishing to defer liabilities of more than £1m are required to obtain an independent report to support their application.

Business rates

Small retailers received a boost with the announcement that from October 2010 properties (whether empty or occupied) with rateable values of up to £6,000 will pay no business rates for one year.

As a consequence, small businesses occupying properties with rateable values of up to £12,000 will also enjoy significant reductions for that period.

Retailers with currently unoccupied properties will also benefit from the news that the 2009/10 increase in the rateable value threshold at which properties qualify for empty rates relief will be extended for the 2010/11 tax year and raised from £15,000 to £18,000.

Capital allowances

Retailers having to spend money on plant and machinery have previously been able to claim tax relief in the year of expenditure for 100% of the money spent, up to a £50,000 limit. For the 2010/11 tax year the limit has been raised to £100,000.

If retailers have to purchase new goods vehicles and decide to be climate-conscious and purchase electric vehicles, they will benefit from 100% capital allowances on the expenditure incurred. This measure will be available for five years from 2010/11.

And finally ...VAT

One positive for retailers as a result of the Budget and the ongoing election campaign is that the spectre of a VAT rise seems to have receded for now, with both main parties claiming they will not raise the VAT rate after the election.

This – and assuming the politicians can be trusted – will be of some comfort to retailers who have had to contend with the problems caused by the switch, in little over a year, of the rate of VAT from 17.5% to 15% and back again.

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Tom Wilde

Solicitor
T: 03700 86 8713
I: +44 (0)118 965 8713
E: tom.wilde@shoosmiths.co.uk