Budget offers more cash for training

30 March 2006
Budget offers more cash for training

Extra training to tackle skills crisis
A total of £10m is to be distributed over the next two years to the UK's Sector Skills Councils (SSC). The aim is to attract and train 10,000 low-skilled women.

What it means Martin Couchman, deputy chief executive of the British Hospitality Association, said the new cash could help tackle hospitality's skills shortage but added: "The scheme's success is reliant on match funding from the industry, something our SSC People 1st has so far struggled to attract."

Minimum wage The youth rate for those aged 16 to 17 will increase from £3 to £3.30 in October.

What it means Couchman said: "We think this will have little effect on operators, as most already pay well above."

Real Estate Investment Trusts (REITS) These allow smaller investors to buy into property without the penalty of paying corporation tax. Trust shareholders are required to pay only income tax on their dividends.

Gordon Brown this year made two key changes to the proposed format of REITS. The first means a REIT need pay out only 90% of its net profits (previously 95%) to avoid paying corporation tax.

The second change was to loan-to-value rates, ie, how much can be borrowed against the property's value. This was increased from 30% to 50-60%, making it more competitive with bank lending.

What it means The changes make REITS more attractive to investors because they can get better returns. But Philip Camble from consultant KPMG warned that REITs could be of limited value to the hotel sector because operators who use the manage-back model don't comply with REIT regulations. To qualify for REIT status, operators need to be on a fixed-rental income, usually linked to leaseback deals.

Plant and machinery Tax relief on new plant and machinery purchases increases from 40% to 50%, from April.

What it means Peter Davis, manager at business advisory firm Vantis, said: "If you're thinking about buying a new warewasher or cooker, this would be a good time to do so as this increase cancels out the cost of equipment depreciation in the first year."

Duty up on booze An extra penny goes on a pint of beer and 4p on wine.

What it means The British Beer & Pub Association described the increase in beer duty as "a missed opportunity for British beer".

Enterprise Investment Scheme (EIS) cut The size of companies qualifying for the tax-efficient EIS was halved. Now only those with gross assets before investment of £7m qualify.

What it means Nigel May, tax partner at MacIntyre Hudson, said: "EIS companies will now be smaller, riskier and less attractive to investors, which will make it harder for smaller businesses to attract initial funding."

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