Tax change will hit small agents

AGENTS are concerned over a tax change in the Budget that will hit small limited businesses.

Chancellor Gordon Brown reversed a decision made two years ago which encouraged businesses to become incorporated by allowing the first £10,000 of profit to be paid as a dividend free of corporation tax and National Insurance.

But now, from April 1, all those in the £10,000 tax-free band – such as small travel agents – will have to pay 19% tax, or £1,900 if the profit is distributed in full.

Worldchoice chairman Colin Heal said: “The benefits of changing have been almost completely wiped out.”

ABTA said 75% of members are limited companies because as sole traders they are liable for any debts if the business fails.