Cautionary tale for small businesses in UK

Findings from a survey of small enterprises in Germany could give British business owners some food for thought about their own tax knowledge.

According to the study by corporate software firm Sage, a large proportion of small firms in Germany were totally unaware of changes to the tax system implemented by the government from January 1st.

Tax-News.com reports that 41 per cent of the survey's respondents were unable to accurately predict how the new tax legislation would impact on their business in the future, while 23 per cent claimed to be ignorant of a new law to reduce the rate of tax on reinvested profits.

Approved by the German parliament in June last year, the reforms will reduce the overall tax burden on the nation's businesses by nearly ten per cent, according to the website.

There are also plans to introduce a capital gains tax rate of 25 per cent from January 2009.

Small company owners in the UK may want to consider the government's plans to clamp down on 'income shifting' - the process by which a business run by a couple or family members can gain a tax advantage by moving profits around - due to be implemented in April.