This March, the Chancellor has presented his Budget to Parliament. Here’s our summary of what the 2016 budget contained and what this means for business.
It’s been estimated that approximately 600,000 small companies will pay no business rates from next April, the Chancellor has announced. Additionally, the overall burden of business rates is set to fall by £6.7billion over the next five years.
It’s also estimated that small firms can be set to save £6,000 a year. Other measures included a cut in the higher rate of Capital Gains Tax from 28 per cent to 20 per cent. The basic rate will fall from 18 per cent to 10 per cent.
Class 2 National Insurance contributions will be abolished for 3.4 million self-employed people. And two new £1,000 a year tax-free allowances will be introduced to help “micro entrepreneurs” who sell services online or rent out rooms.
After campaigns fighting hard for business rates reform there has been an announcement of reliefs and the creation of a business rates roadmap to create “a level playing field for businesses”. The chancellor announced a new £15,000 threshold for small business rate relief, more than double the previous level of £6,000. He also increased the higher rate from £18,000 to £51,000, and said the changes mean 600,000 small firms will pay no business rates at all.
Tax allowances and NICs, online allowances and higher rates
The self-employed will soon no longer have to pay class 2 national insurance contributions as it is to be abolished from April 2018. The chancellor is also raising the threshold for paying income tax to £11,500 by 2017. The threshold for paying the higher rate of tax is also to be raised, from £43,000 to £45,000 in the tax year 2017/18.
New £1,000 online allowances for people who rent out their homes and make money through sharing economy platforms are to be introduced. The chancellor said no forms or paperwork were needed but was a part of bringing the tax system into the digital age.
A surplus by 2019-20
This year the deficit will have been cut by almost two thirds from its peak. Over the next 4 years, the deficit will have been eliminated and the government will be running a surplus – where more tax is raised than is spent.
To help achieve this, there will be a further £3.5 billion of savings from departmental spending in 2019-20, less than 50p in every £100 the government spends. There will be an efficiency review to inform future spending decisions.
A new sugar tax on the soft drinks industry to be introduced in two years’ time, raising £520m a year to be spent on doubling funding for primary school sport in England. The levy is to be calculated on levels of sugar in sweetened drinks produced and imported.
Pure fruit juice and milk-based drinks to be excluded and small suppliers will be exempt
Freeze on duty
Fuel duty to be frozen at 57.95p per litre for sixth year in a row. Beer, cider, and spirits duties to be frozen. Inflation rise in duties on wine and other alcohol. Excise duties on tobacco to rise by 2% above inflation.