Budget key points for business

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Our summary of the budget headlines relating to business and self-employment.

Tax

  • From 6 April 2016, the higher rate of Capital Gains Tax (CGT) will be reduced from 28% to 20%, and the basic rate will be reduced from 18% to 10%.
  • The VAT registration threshold will increase in line with inflation to £83,000 from 1 April 2016.
  • Class 4 National Insurance contributions (NICs) will be reformed so that the self-employed continue to build entitlement to the State Pension and other contributory benefits, following the abolition of Class 2 NICs from April 2018.
  • A new £1,000 allowance for property income and £1,000 allowance for trading income will be introduced from April 2017. Individuals with property or trading income below £1,000 will no longer need to declare or pay tax on that income.
  • From April 2017, where the public sector engages an off-payroll worker through their own limited company, liability to pay the correct employment taxes will move from the worker’s own company to the public sector body or agency / third party paying the company.
  • The Office of Tax Simplification (OTS) will review the impacts of moving employee NICs to an annual, cumulative and aggregated basis and moving employer NICs to a payroll basis.
  • The main rate of corporation tax will be reduced to 17% in 2020.

Self-employment

  • From 2018 businesses, the self-employed and landlords who are keeping their records digitally and providing regular digital updates to HMRC will be able to opt for pay-as-you-go tax payments.
  • Self-employed Working Tax Credit claimants will be able to access business support. The mentoring support offered on the New Enterprise Allowance scheme will be extended to self-employed Universal Credit claimants.
  • The DWP will trial face-to-face support from Jobcentre advisors for self-employed Working Tax Credit claimants.

Business rates

  • Small Business Rate Relief (SBBR) will be permanently doubled from 50% to 100% in England from 1 April 2017.
  • Business properties with a rateable value under £12,000 will qualify for 100% relief, while properties with a rateable value between £12,000 and £15,000 will qualify for tapered relief.
  • By 2022, local authority business rate systems will be linked to HMRC digital tax accounts so that business owners can manage their rates bills alongside other taxes in one place.

Funding

  • Further steps have been announced for the allocation of the Local Growth Fund, including up to £1.8 billion allocated through a further round of Growth Deals with Local Enterprise Partnerships later in 2016.
  • The next round of the Coastal Communities Fund, for projects starting in 2017-18, will open for applications in summer 2016.

Employment law

  • A consultation will take place in May 2016 on how to extend Shared Parental Leave and Pay to working grandparents.
  • From October 2016 the main rate of National Minimum Wage for workers aged 21 to 24 will be set at £6.95.

Further reading

 

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