Chancellor George Osborne announced tax cuts and reforms in his sixth annual Budget. Find out how it could be beneficial to UK small business owners…
George Osborne arose in the Commons yesterday to deliver his sixth annual Budget, his aim to put ‘stability-first’ in face of a ‘dangerous cocktail’ of economic risks. Small businesses saw the spotlight for once, as he hinted they would prior to his speech:
Today's budget puts the next generation first: delivers surplus, improves schools & health, boosts savings & small biz, backs working people— George Osborne (@George_Osborne) March 16, 2016
And over his hour long address he lived up to his word, an array of measures spilling out of the old red suitcase.
So, what were the small business highlights?
Big changes to business rate relief
Perhaps the biggest news came in the shape of Osborne’s business rate shake-up, the Budget revealing a new £15,000 threshold for small business rate relief.
This is more than double the previous level of £6,000 and it’s a move that’s been welcomed by many, including FSB members:
The higher rate was also increased from £18,000 to £51,000, with the Chancellor suggesting that 600,000 will pay no business rates at all. Good news all round? Perhaps not, if you believe the assertions of certain MPs…
Generous cuts in business rates for small business - but this won't be paid for by the treasury. Councils will have to stump up #Budget2016— Jo Cox MP (@Jo_Cox1) March 16, 2016
But the tax tinkering doesn’t end there…
On top of the changes to business rates Osborne delivered some more tax titbits, the biggest goodies for small businesses including:
- The abolishment of Class 2 National Insurance Contributions from April 2018
- A rise in the Income Tax threshold to £11,500 by 2017
- A rise in the higher rate of Income Tax threshold, from £43,000 to £45,000 in April 2017
- A 3% cut in Corporation Tax to 17% by 2020
- A cut in the top rate of Capital Gains Tax from 28% to 20% (effective from this April) with the basic rate falling from 18% to 10%
By and large the reaction has been pretty favourable, some going so far as to call the measures a ‘magic trick of treats’…
'This is a Budget to get rid of tax for small business' Magic trick of treats for small business / corp tax/ rates/ tax relief #Budget2016— Emma Jones (@emmaljones) March 16, 2016
However, some were a little more sceptical - Jeremy Corbyn for one. According to the Leader of the Opposition this was a Budget more for ‘hedge fund managers rather than small businesses’.
Investment in infrastructure
In addition to his abundance of tax commitments Osborne also promised extra infrastructure investment, HS3 - a new high speed line between Leeds and Manchester - given the go-ahead.
An extra £700m in flood defence spending has been promised, as has £161m worth of investment in the M62, whilst another £75m has been put aside to improve other northern roads. Everything here seemed geared towards creating the government’s Northern Powerhouse - a pet project of Osborne’s since he came to power.
A freeze in fuel duty
In especially good news for Britain’s tradespeople, the Chancellor also pledged to freeze fuel duty, saving the typical small business with a van an estimated £270 per year. A substantial saving, it’s one that’s been welcomed amongst the trade community.
A stamp duty switch
Finally, in a measure that was enforced last night, there will no longer be commercial stamp duty paid on a property purchase above £150,000. Two per cent will be payable on £150,000- £250,000 properties, and a top 5 per cent rate will be enforced thereafter. According to Treasury 90 per cent of businesses will pay the same or less as a result of this change.
That’s about the biggest small business news we took from this year’s Budget. Will the Chancellor’s pledges help or hinder your business? Let us know in the comments section below.