Small Business Highlights
The 2016 Budget got underway against a backdrop of economic uncertainty and suggestions from many commentators that Chancellor George Osborne is facing a black hole in the public finances.
It isn’t always easy to pull the facts from the rhetoric but here is Lewis Smith & Co’s list of Budget announcements that most directly affect the small business sector.
Fuel duty
Slightly surprisingly but very welcome was the news that fuel duty rates will be frozen through the next tax year.
Stamp Duty
It was confirmed that there will be a 3% increase in Stamp Duty for buy-to-let properties and second homes above £40,000 from 6th April 2016.
This applies to companies and individuals.
The way stamp duty on freehold commercial property and leasehold premium transactions is calculated will change. Currently, these rates apply to the whole transaction value. From 17 March 2016 the rates will apply to the value of the property over each tax band. According to HMRC this means that buyers of commercial property worth up to £1.05 million will pay less in stamp duty.
Business rates
Of particular interest to many Lewis Smith & Co. clients is the news that small business rate relief will increase from 50% to 100% on a permanent basis.
If your business property has a rateable value of £12,000 or below you will receive 100% relief. If your business property has a rateable value of £12,000 to £15,000 then relief will be tapered.
A further bonus is that the measure of inflation used to calculate business rates will be switched from the retail price index (RPI) to the consumer price index (CPI) from April 2020. RPI includes housing costs, which has inflated the rate.
Corporation and Capital Gains Tax
Corporation tax will be reduced to 17%, from 20%, by 2020.
From April 2016 the basic rate of capital gains tax will br reduced from 18% to 10% while the higher rate will fall from 28% to 20%.
Class 2 NICs scrapped
Class 2 National Insurance Contributions (NICs) for the self-employed will be scrapped from April 2018.
That means if you are self-employed you only need to pay Class 4 NICs as and when your profit exceeds £5, 965. Class 4 NICs will be reformed so self-employed people can continue to build benefit entitlement.
New Tax Free Allowances
There are two new £1,000 allowances designed to support the on-line, sharing economy.
The first allowance is for part-time business owners who sell goods or provide services – occasional selling on eBay or child care for instance.
The second covers income made from property that you own such as letting out rooms on airbnb.
Personal Tax
There was a reminder that the tax-free Personal Allowance will increase to £11,500 in April 2017 while the higher rate threshold will rise to £45,000 at the same time.
A Lifetime ISA will be launched in April 2017 allowing adults under 40 to save up to £4,000 each year and receive a 25% bonus from the government.
Money put into this account can be saved until you are over 60 and used as retirement income, or you can withdraw it to help buy your first home.
The total amount you can save each year into all ISAs will also be increased from £15,240 to £20,000 from April 2017.
Unsure What This Means for You?
As always the “devil is in the detail”and the impact of the Budget on your business and personal finances will be influenced by a range of parameters.
If you need help sorting it all out why not speak to Lewis Smith & Co.
Simply call 01384 235549 or email info@lewissmith.com and set-up a free, no-obligation discussion today.
Lewis Smith & Co. – Local accountants for West Bromwich businesses.
Photo courtesy of M.Holland under Creative Commons license
