It looks like Osborne is finally giving back to small businesses what major corporations have been skimming off the top for years. Take a look at what the latest changes could mean for your business.
Up until now, you’ve probably had to pay business rates on any property you use for commercial purposes. These rates were uniform, meaning all small businesses, regardless of their size, have had to pay the same amount. For many, this has seemed a complete injustice, since business rates have continued to eat away at their profits.
However, in the latest budget, the chancellor has more than doubled the rate relief threshold. Now, small businesses won’t have to pay business rates on premises with a rateable value of less than £15,000. Millions of small businesses are expected to benefit from this increase, with nearly 600,000 of them paying no business rates at all. If you are unsure whether you qualify for rate relief, then ask your small business accountant for more information.
The chancellor has been busy this year, slashing tax percentages and raising the tax allowances for others. The most notable change is the eradication of class 2 national insurance contributions, which will be abolished from April 2018. From that point, self-employed business owners will now only need to focus on paying class 4 contributions as they did before.
There have also been some major changes to income, corporation and capital gains tax. The threshold for paying income tax will now be £11,500 compared to the previous £10,200. In the 2017/2018 tax year, the threshold for higher rate tax will also be increased from £43,000 to £45,000.
The good news continues with corporation tax, as the chancellor has vowed to put an end to the exploitation of the system by multinational corporations. There’s also the promise of a 3% cut by 2020, meaning only 17% of your small business profits will need to go towards the tax. Capital gains tax also gets a trim, as basic rates fall from 18% to 10%. Higher rate taxpayers will now pay 20% rather than 28%.
Stamp duty is one of those things that no one likes paying. Fortunately, the latest budget has taken this into account, with the threshold for payment increasing across the board. All commercial properties of a value less than £150,000 will now be subject to absolutely no stamp duty. The rate then increases to 2% for properties between £150,000 and £250,000 and 5% for any property exceeding this limit. Whilst it may not make a significant difference to small business finances, it will certainly be a notable change for many. The government predicts that 90% of small businesses will either pay less or the same as before.