The Effect of National Policy on Business

Capital Gains Tax is charged on the sale or disposal of assets where the total Capital Gain over the financial year is over the yearly amount.

The Finance Act 1965 introduced a new tax on companies, Corporation Tax. This is a tax applied to profits of limited companies. The Standard Rate of Corporation Tax is 30%

BENEFITS, SUBSIDIES AND GRANTS

Some businesses receive theses subsidies and benefits etc. Where taxes take money out of the economy subsidies put these back in. They are put in to help subsidies the production of a good or service that is likely to help people. For example the government are likely to subsidies book companies, as it will make the books cheaper for the buyers and then encouraging people to read.

The government will subsidies newly formed businesses who will face intense foreign competition.

EXCHANGE RATES

When changing money from one currency to another, to find out how much money you should get for your previous currency, you must refer to the exchange rates. When your currency rises in value against other currencies it makes your goods more expensive to export.

Government plays a role in deciding the exchange rates. The demand and supply of the pound sterling determine the rate. The fiscal and Monetary Policies may affect this.

A strong government leads to confidence in it from foreigners meaning they are more likely to invest in us but when we have a weak government they don't like to invest in the UK.

PUBLIC SECTOR SERVICES

The public sector provides several major services including the Post Service and the Police.

A lot of the services that are now in the public sector were controlled by the government years ago until privatisation which started in 1979. Privatisation caused the government to contract out some of their key services to private companies.

Businesses benefit from the public sector services as services like the police look after their premises etc. Although the businesses have to pay for these services to the local governments, as tax, they help them become efficient and also to keep their costs down.

The government has then been able to keep an eye on the wage levels in the public sector as they pay the wages, although they can't keep such a good eye of the private sector as they have no say in the running.

CHANGES IN INTEREST RATES

The Borrowing of money is what interest rates represent. The Bank of England decides the interest rates; they can change the way in which the economy works in accordance to where about we are in the economy life cycle.

They can influence the economy by putting borrowing prices up to make the population save and also they can put the price of borrowing down so that more people will borrow money and so therefore will spend more. This can effect the economy because it affects how much money is going in and out of the economy.

Andrew White 12c