UK and International Tax news
Changes To SME Limits
Wednesday 5th October 2022
The Government has announced changes are to be made to regulations applying to small and medium sized enterprises with effect from 3 October 2022.
In a statement from the Prime Minister Liz Truss on 2 October, “thousands of the UK’s fastest-growing businesses will be released from reporting requirements and other regulations in the future, as part of plans aimed at boosting productivity and supercharging growth”.
Currently, small businesses are presumed to be exempt from certain regulations. However, many medium sized businesses including those with between 50 and 249 employees still consider regulation to be a burden to their operation.
The Prime Minister has announced plans to widen these exemptions to businesses with fewer than 500 employees for future and reviewed regulations, with effect from Monday 3 October. The government has said it will also look at plans to consult on potentially extending the threshold to businesses with 1,000 employees, once the impact on the current extension is known.
With regard to taxation, legislation can stipulate size limits so that an exemption for small or medium sized enterprises applies, for example in transfer pricing. However, it is not certain whether there will be changes in tax policy for ‘small’ businesses where eligibility for a tax relief or incentive is limited by reference to the number of employees.
We await further announcements from government as to which regulations will be affected and in particular which tax reliefs and exemptions will change.
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