Originally written by Timothy Adler on Small Business
Accountants have raised their eyebrows at an unforced schoolboy howler in Labour’s manifesto, which the party has hurriedly gone in and fixed.
Labour has announced plans to increase corporation tax to 26 per cent for businesses, compared with today’s rate of 19 per cent.
Within this, Labour originally proposed that small businesses would pay corporation tax at a lower rate of 21pc if their turnover is over £300,000.
If kept in, this would have created an anomaly where a small business making a tiny profit on turnover of £300,000 would pay corporation tax, while a competitor making a fat profit on much lower turnover would escape tax.
However, after realising they had muddled up turnover and profit, Labour has since published a revised document outlining its plan to reintroduce a small profits rate for firms with profits greater than £300,000.
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Robert Salter, director at Blick Rothenberg, the accounting and tax advisory company, told The Times: “One must worry whether the initial communication in this regard indicates a potential lack of awareness about businesses and the difference between turnover and profit.”
Tim Walford-Fitzgerald, a tax partner at the