The key question on everyone’s lip remains: will the 2016 budget deliver for UK entrepreneurs? Take a look at our top eight key small business policies, announced below, to see whether you’re business could benefit from the proposed changes:
1) New tax-free allowances for the sharing economy
One allowance will be for selling goods or providing services and the other will be for income on any property you own. For part-time business owners, this means they will no longer have to pay tax on occasional jobs such as providing a lift share or selling goods, which enables them to make up to £1,000.
In a surprise announcement from the Chancellor, the government will be introducing two new tax-free £1,000 allowances that will come into effect from April 2017.
2) Cuts to business rates
Small business rate relief will double from £6,000 to £12,000 from April 2017. Small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates and there will be tapered rate relief on properties worth up to £15,000. According to George Osborne, this will effectively mean that up to 600,000 businesses will pay no rates.
3) Reductions to Corporation Tax
As part of the Budget 2016, George Osborne has announced that corporation tax will fall to 17% (from the current 20%) by April 2020. The Chancellor also confirmed that Capital Gains Tax at the higher rate will drop from 28% to 20% from April 2016, with the basic rate dropping from 18% to 10%.
4) Class 2 NICS for self-employed to be scrapped
From April 2018, Class 2 National Insurance Contributions (NICs) for self-employed people will be scrapped. If you’re self-employed this means that you will only need to pay one type of National Insurance (Class 4 NICs) if you make a profit of £5,965 or over per annum.
5) Green light for HS3 and Crossrail
The Government will invest £60 million for the High Speed Rail 3; benefitting businesses in the North by cutting journey times to around 30 minutes between Leeds and Manchester. £80 million will also be invested in Crossrail 2 to connect South West and North-East London, which will have a positive knock on effect for inter-city commuters across the UK, by helping to reduce travel time.
6) “Fundamental reform” of the tax system
Targeted at large companies and set to benefit small companies, the Government plans to raise almost £8 billion from large firms and multinationals through changes to rules on interest and other measures, including:
- Introducing rules to prevent multinational companies that avoid paying tax in any of the countries they do business in
- Taxing outbound royalty payments better meaning multinationals pay more tax in the UK
- Making sure offshore property developers are tax on their UK profits
According to George Osborne, this £8 billion will be reinvested to help small businesses that “pay their fair share”
7) Extension of Entrepreneurs’ Relief
Entrepreneurs’ Relief will be extended specifically to encourage investors to back unlisted companies. The Chancellor has also added an additional £10 million of relief on top of the existing limit.
8) Stamp Duty reform
The Government will cut the tax for many small businesses purchasing property by reforming Stamp Duty Land Tax on non-residential property transactions, specifically office space.