Experts fear for small companies over tax changes

Experts are warning that income tax changes later in the year will cause a lot of problems for small businesses, reports The Independent.

The changes involve raising the basic tax threshold, which came about as a result of the government's move to regain political footing over the 10p tax issue, the paper reports.

However, according to Simon Briault from the Federation of Small Businesses, confusion over the personal allowances increase to £600 before tax kicks in may be inevitable.

"The problem is that many small business owners don't know the change is coming and that they are going to have to backdate the new personal allowance to April," he said.

"This could become a massive issue if wages are paid incorrectly."

"It's the thousands of small enterprises with a handful of employees I fear for," he said, stating that it will be especially hard for small businesses that do their payroll themselves.

Another expert, Chas Roy-Chowdhury from the Association of Chartered Certified Accountants, said the September pay packages needed to reflect "quite a difference" because the changes are backdated.