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Thursday, 25 March 2010

The 2010 Budget: the impact for TMCs

Today’s newspapers are full of stories entitled “How YOU will be affected”. The annual round-up of how smoking and drinking single mothers, car-driving families with 2.2 children and pensioners will be affected by the Budget is as traditional as the appearance of the battered red briefcase outside 11 Downing Street.

But how will TMCs be affected by Chancellor Darling’s pre-General Election Budget?
For small TMCs, there are some extra benefits. The government is extending its Time to Pay initiative, which allows businesses to spread their tax payments over an agreed timetable.

Businesses will also enjoy a temporary increase in the level of small business rate relief. Small TMCs occupying properties with rateable values up to £6,000 will pay no business rates for one year from October while those benefiting from the rate relief taper (rateable values up to £12,000) will receive significant reductions.

One thing that was widely expected was an increase in the rate of VAT to 20%. Coming just after the return to 17.5% from the reduced rate of 15% on 1 January, perhaps this was unpalatable for the Chancellor when the election is just weeks away.
Travel management companies that have a significant number of clients in the public sector – a sector worth around £5 billion by some accounts – will have taken note of the Budget’s focus on costs.

It said that the Government had identified more than £11 billion that could be saved every year from 2012-13. High up on the list of ways to deliver these savings is the concept of “collaborative procurement”, a phrase scattered liberally throughout the full text of the Budget, made available just after the Chancellor sat down.
This means even greater efforts by Buying Solutions, the executive agency that looks after public sector procurement, in the area of travel. It will soon announce the winners of a vast £3bn tender to look after the travel requirements of everyone from central government down to local authorities.

There were no changes announced on air passenger duty. APD moved to a geographical footing base don the distance to the capital of the country where travelers are heading in November. Next November’s further increases are set to go ahead too. Looking at the small print, the Budget predicts that the unloved tax will raise £2.4 billion for Government coffers in 2010-11, up half a billion pounds on this year. To put that in context, that’s more than is raised by inheritance tax and almost as much as amount by the duty on whiskey and other spirits. Trebles all round!

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