The Helpful Bean Counter would like to provide you with a quick update on the Budget announcements. The chancellor’s 2016 Budget had much in it of interest to small companies. Here are the measures you need to know.
Small business rate relief will be permanently doubled from 50% to 100%. Businesses with a property with a rateable value of £12,000 and below will receive 100% relief. Businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief. As a result, 600,000 small businesses will pay no business rates.
From April 2020, business rates will be based on the consumer price index (CPI), the main measure of inflation, instead of the retail price index (RPI), a move called for by business groups.
The government is also planning to modernise the administration of business rates.
Corporation and Capital Gains Tax
The government will cut corporation tax to 17% by 2020. From April 2016, capital gains tax at the higher rate will fall from 28% to 20%, with the basic rate dropping from 18% to 10%.
Adults aged under the age of 40 will be able to save using a new lifetime ISA from April 2017. They will be able to contribute up to £4,000 per year, and receive a 25% bonus from the government.
ISA and Personal Allowances
The ISA limit will increase to £20,000, and the personal tax-free limit will be raised to £11,500 from April 2017
From April 2018, Class 2 National Insurance Contributions for the self-employed will be abolished meaning self-employers workers will only need to pay one type of national insurance if your profit exceeds £5,965.
Fuel duty will be frozen for the sixth year in row.
Help to Grow
The government’s pilot Help to Grow initiative for growth businesses has been expanded up to £200m.
Enterprise Finance Guarantee scheme
The Enterprise Finance Guarantee, will be extended to at least March 2018 to support over £250m of lending per year. The programme helps small businesses that might not get the loan they need because of a lack of sufficient collateral or a track record.
The government intends to raise £8bn in tax from larger businesses through changes including rules to prevent multi-national companies avoiding paying tax in the countries they operate in and taxing outbound royalty payments meaning multi-nationals pay more tax in the UK. Osborne said the revenue raised will be used to help the small companies “who pay their fair share of tax”.
Personal service companies
Public sector companies need to ensure employees pay the correct tax rather than allowing an advantage to those paid through personal service companies, a method used by many independent freelancers and contractors.
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