We’ve spent this afternoon listening to the budget to find out what tax changes are in store for us over the coming months.
George Osbourne branded his 8th budget as one that “backs business”. There was a big focus on measures to help small and micro businesses in the digital age, so with this is mind we have summarised the important points that you as business owners need to be aware of.
Corporation tax & capital gains
It was announced that corporation tax will decrease to 17% by April 2020 from the current rate of 20%. Changes have also been announced to
The small business rates relief is raised from a rateable value of £6,000 to £15,000 and the higher rate is being raised from £18,000 to £51,000. It is expected that these changes will remove 600,000 businesses from paying business rates.
Personal service companies
Tax loopholes that are used by individuals operating personal service companies will come to an end. We currently do not have any additional information on the details of how this is planned to be achieved.
Tax free allowances
This is aimed at micro businesses or people who want to earn a little bit of extra cash on the side. The allowances each allow you to earn £1,000 without paying tax on that income. One allowance is on selling goods or providing services and is aimed at those who maybe sell on Ebay or Amazon or who do a bit of freelancing on the side. The other allowance is £1,000 for any income on any property you own so this may be interesting for the occasional Air BNB landlord out there?
Commercial stamp duty
The stamp duty rate will be cut for commercial property. It will be 0% on purchases up to £150,000, 2% on the next £100,000 and 5% for any amount above £250,000. This becomes effective from midnight tonight.
This will be extended with the aim to encourage investors to back unlisted companies. The relief will be extended by £10m.
Businesses up North will benefit from HS3 being given the go ahead. This £60m project aims to cut journey times between Leeds and Manchester to 30 minutes.
Class 2 NIC
Class 2 contributions, which are paid by the self-employed, will be scrapped from Airl 2018. This is to simplify the tax system and means that only class 4 national insurance will be payable for the self-employed.
The personal allowance, which is rising to £11,000 from this April is set to increase to £11,500 from April 2017.
Personal tax thresholds
The higher rate tax threshold is due to increase in April 2017 to £45,000 from £43,385 now.
Other changes announced
Two big other announcements were made in the budget today,
One was a sugar levy on drinks with added sugar which will come into force from April 2018. The money raised from this will go to increase sports spend in schools.
The other large announcement was the introduction of a lifetime ISA. Under this plan anyone under the age of 40 can save up to £4,000 per year in the lifetime ISA and will receive a 25% contribution each year from the government. This ISA aims to either help people save for a home or for retirement.