Budget (5): Surprises in the small print

As the dust settled on the Chancellor's Budget, tax experts were researching the 300 pages of accompanying reports to see what 'devil was in the detail'.

Small business tax expert, Anne Redston, Fellow of the Chartered Institute of Taxation, identified a few surprises in the small print, including the start of an attack on composite or umbrella companies; a tax on home use of computers and a change to tax filing deadlines.

Composite companies

Anne Redston As reported in UKTECH (Budget (4): Managed service companies review), the Chancellor issued a warning shot across the bows of some composite or umbrella companies.

Anne Redston said: "Buried in the small print are the first salvoes of an attack on composite or umbrella companies.

"These companies are widely used to supply individual contractors to big companies in the UK.

"HM Revenue & Customs is concerned that these companies are avoiding - or evading - income tax and National Insurance Contributions (NICs), and has announced that it is consulting on new rules to prevent this."

Computers

While one Government department, the DTI, has been encouraging employers to provide computers to employees, the Treasury has now put a tax on this.

Anne Redston said: "There is a real shock in this Budget for businesses who loan computers to employees. From April 6, new loans will attract a tax charge of up to £200 per employee, plus national insurance.

"This comes hard on the heels of an active Department of Trade and Industry (DTI) campaign to encourage employers to provide these computers.

"Either the right hand of government doesn't know what the left is doing, or else the Treasury have just torpedoed the DTI's Home Computer Initiative.

Either way, it is a nasty surprise for employees and employers."

Income tax deadlines

Anne Redston said: "You will face another surprise in 2008, in the shape of tighter deadlines for filing self-assessment tax returns.

"The Government's Carter review of HM Revenue & Customs' online services has recommended that all paper self-assessment returns must be received by the end of September - instead of 31 January as is currently the case.

"The Government now says it has accepted this recommendation - as well as one which changes the deadline for online filings.

"If you file online, you will have another two months till the end of November. This, too, is more demanding than the current January deadline."