The 2016 Budget, delivered by George Osborne included a number of changes to policy that could be particularly favourable to businesses in the UK. The Budget received positive reviews from a number of leaders in the business world, including the policy director of the Federation of Small Businesses, Mike Cherry, and the acting director general of the British Chambers of Commerce, Adam Marshall.
Changes to Capital Gains Tax
The Capital Gains top rate has been reduced from 28% to 20% for commercial premises. The lower rate has been reduced from 18% to 10%, which includes the sale of equity in a company, although it doesn’t apply to residential properties.The new rates were introduced from April this year.
Corporation Tax
Around one million companies will benefit from the reduction of Corporation Tax to 17% by April 2020. The Government has also pledged to take action against large corporations that manipulate the tax system to avoid payment of tax.
Business rates
Small business rate relief will be more than doubled to £15,000, from the previous rate of £6,000. The higher rate has been increased to £51,000 from the previous rate of £18,000. The reform of business rates has been at the forefront of campaigns from business lobbies for a while, and a victory has been claimed stating that the move has created “a level playing field for businesses”. According to Osborne, around 600,000 small businesses won’t pay any business rates under the new level of rates.
Self-employed will benefit
During the Budget announcement, the Chancellor stated that there would be an allowance of £1,000 for anyone who makes extra money from such enterprises as selling on sites like eBay, or renting out a room. The allowance will be introduced from April 2017, meaning that the first £1,000 of extra income or property-related income won’t have to be declared. When calculating the expenses, the £1,000 will be deducted as an allowance. From April 2017, the allowance already given for renting out a room will be increased to £7,500. However, the £1,000 can’t be claimed in addition to the ‘rent a room’ scheme, unless the income relates to another aspect of property-related income, like renting your driveway.
Any business that doesn’t outsource accounting may find that it requires extra help to factor in all the changes announced in the 2016 Budget. Please contact us to arrange a meeting so that we can help maximise the benefits of the Budget.