Concerns have been raised that the Treasury’s planned income tax relief cap could restrain small business investment and deter entrepreneurs.
During the budget earlier this year, the Treasury announced plans to place a £50,000 limit on uncapped income tax relief; or twenty-five percent of an individual’s income – by 2013/2014 – depending on which is the greatest figure.
They also announced plans to place a cap on tax relief for losses.
However, it has now been claimed that this is likely to impact struggling small and medium sized businesses, whilst entrepreneurs could also be affected; with one economist saying: “Small and medium business owners are battling to ride the storm in the present UK economy. By their very nature, loss making businesses are generally strapped for cash, and this proposal to cap loss relief could literally mean the difference between success and failure.
“Furthermore, it could deter entrepreneurs from starting up new businesses – or could at the very least, mean that their investment is more restrained.”
The government are now seeking views on their proposals, with a deadline for all views to be submitted by October 5th 2012; however for businesses or individuals who are concerned about how the Treasury’s proposals could impact upon their income tax relief, the accountancy professionals at Milsted Langdon are on hand to offer advice and support.
As an accountant in Bristol, Elaine Durrant specialises in offering tax advice, guidance and support to businesses and individuals.