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March 16, 2016
A Budget for small firms and sole traders
George Osborne has unveiled a raft of announcements in his 2016 Budget Statement aimed at making life easier for the UK's small businesses and sole traders.
These include a fall in the corporation tax rate, extended small business rate relief and a cut in stamp duty on commercial premises. He has also abolished Class 2 National Insurance contributions for the UK's three million self-employed workers.
With promises to crack down on tax avoidance by corporate firms and multi-nationals, this is arguably the most pro-small business budget that Osborne has delivered to date.
However, the announcements came against a backdrop of a global economy that is "materially weaker" and lowered growth forecasts for the UK for the next three years. The growth forecast in 2016 is now 2%, down from 2.4% in the Autumn Statement.
Small businesses were treated to a string of good news announcements in this budget, starting with news that corporation tax is to fall from 20% to 17% by 2020. At the same time, Osborne outlined anti-tax avoidance and evasion measures and said he would close corporate tax loopholes.
Business groups have long campaigned for reform to business rates. In his Budget Statement, Osborne announced that the annual threshold for small business rate relief is to be raised from £6,000 to a maximum of £15,000. It means thousands of small firms will no longer pay any business rates at all.
There was also good news for SMEs regarding commercial property. Effective from midnight, Osborne announced that commercial stamp duty land tax would be 0% on purchases up to £150,000, 2% on the next £100,000 and 5% on premises worth over £250,000.
There were some significant changes to personal taxation. In April 2017 the tax-free personal allowance will rise to £11,500 and the 40% tax threshold is to go up from £42,385 to £45,000.
In addition, the UK's self-employed workers will be at least £130 better off from 2018 when the Government abolishes Class 2 National Insurance contributions for the self-employed.
And in a bid to boost investment in enterprise, Osborne also cut Capital Gains Tax from 28% to 20%, and from 18% to 10% for basic rate taxpayers (excluding property).
Image: © Reg Ramai on Flickr
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