Budget 2016: The key measures small business owners NEED to know
George Osborne today unveiled his “long term economic plan”. Here are the crucial business policies announced and what they mean for your business
In his eighth budget, chancellor of the exchequer George Osborne today revealed the 2016 budget or as he referred to it: ‘a budget that backs businesses'.
With a focus on “acting now so we don't pay later” and “putting the next generation first”, Osborne announced a raft of measures to help enterprises including a reform of the business tax system, rate relief, and “tax breaks for the digital age”.
So, has the 2016 budget delivered for UK entrepreneurs? Check out the key small business policies announced and decide for yourself…
New tax-free allowances for the sharing economy
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.
One allowance will be for selling goods or providing services and the other will be for income on any property you own. Therefore for part-time business owners that make up to £1,000 from occasional jobs such as providing a lift share or selling goods you have made, you will no longer need to pay tax on that income.
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. Osborne said this will effectively mean that 600,000 businesses will pay no rates.
Reductions to Corporation Tax and Capital Gains Tax
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%.
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 so if you're self-employed 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.
Green light for HS3 and Crossrail
The government will invest £60m for the High Speed Rail 3; this will benefit businesses in the North by cutting journey times to around 30 minutes between Leeds and Manchester. £80m will also be invested in Crossrail 2 to connect South West and North-East London.
“Fundamental reform” of the tax system
Targeted at large companies and set to benefit small companies, the government plans to raise almost £8bn 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 taxed on their UK profits
Osborne said this £8bn will be reinvested in helping the small businesses that “pay their fair share”.
Extension of Entrepreneurs' Relief
Entrepreneurs' Relief will be extended specifically to encourage investors to back unlisted companies; the chancellor has added an additional £10m of relief on top of the existing limit.
A “devolution revolution”
Focused on making the ‘Northern Powerhouse' a reality, government will devolve powers to local mayors.
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 (office spaces and the like).
Fuel Duty frozen
Fuel Duty will be frozen for a sixth year in a row.
Sugary drinks levy introduced
A measure that will impact drinks businesses, there will be a levy that companies will have to pay on drinks with added sugar from April 2018. The money raised from the levy will be used to double the sports premium for schools to £320m a year.