Here's a whistlestop tour of the bits of the budget that we think are of most significance to
small and medium sized businesses and their owners. We'll keep it short - but if there's anything you've heard about that
may affect you that we've not mentioned here, drop us a line.
Caveat
We'll almost certainly be having another budget within a few months. An incoming Conservative goverment is committed to a budget within 50 days of the election. A further Labour government would almost certainly make some changes too. So bear in mind that all this may change before long.
Income Tax, Corporation tax, National Insurance
All of these are as previously announced. So, if you've planned your salary or dividends for the next year based upon the anticipated thresholds and rates, it's full steam ahead with that schedule.
Entrepreneur's Relief
This is a relief that potentially reduces your Capital Gains Tax bill on the sale of a business, effectively reducing the rate of tax you pay from 18% to 10%. Until now, that's been available on the first £1million of such gains that you make in your life, representing a potential tax saving of £80,000 (because you'd pay £100,000 of tax on the gain, not £180,000). Now, it's going to be available on the first £2million of gains, so could be worth £160,000.
Annual Investment Allowances
For the last couple of years, you've been able to deduct the first £50,000 of new kit you've bought (plant and machinery, computers, vans etc - not cars) from your business profits before working out your corporation tax or income tax bill. That's been increased to £100,000. This was announced as being of benefit to small businesses, but of course the vast majority of small businesses are spending nothing like £50,000 a year on new equipment in any case. The old threshold covered the full capital expenditure of 97% of businesses - the new threshold covers 99%.
VAT
The annual turnover threshold at which a business is obliged to register has gone up to £70,000. The VAT rate stayed the same, hurray!
Something that hasn't been widely mentioned in budget coverage is a proposal to introduce late filing penalties for VAT returns at some point in the next year. The proposal is a fine of £100 for the first return that's late during a year, escalating by £100 for each subsequent late return.
Business Rates
The Small Business Rate Relief scheme is being extended so that, for a year from October, many small businesses will pay lower business rates - or none, in some cases.
Stamp Duty
Caveat
We'll almost certainly be having another budget within a few months. An incoming Conservative goverment is committed to a budget within 50 days of the election. A further Labour government would almost certainly make some changes too. So bear in mind that all this may change before long.
Income Tax, Corporation tax, National Insurance
All of these are as previously announced. So, if you've planned your salary or dividends for the next year based upon the anticipated thresholds and rates, it's full steam ahead with that schedule.
Entrepreneur's Relief
This is a relief that potentially reduces your Capital Gains Tax bill on the sale of a business, effectively reducing the rate of tax you pay from 18% to 10%. Until now, that's been available on the first £1million of such gains that you make in your life, representing a potential tax saving of £80,000 (because you'd pay £100,000 of tax on the gain, not £180,000). Now, it's going to be available on the first £2million of gains, so could be worth £160,000.
Annual Investment Allowances
For the last couple of years, you've been able to deduct the first £50,000 of new kit you've bought (plant and machinery, computers, vans etc - not cars) from your business profits before working out your corporation tax or income tax bill. That's been increased to £100,000. This was announced as being of benefit to small businesses, but of course the vast majority of small businesses are spending nothing like £50,000 a year on new equipment in any case. The old threshold covered the full capital expenditure of 97% of businesses - the new threshold covers 99%.
VAT
The annual turnover threshold at which a business is obliged to register has gone up to £70,000. The VAT rate stayed the same, hurray!
Something that hasn't been widely mentioned in budget coverage is a proposal to introduce late filing penalties for VAT returns at some point in the next year. The proposal is a fine of £100 for the first return that's late during a year, escalating by £100 for each subsequent late return.
Business Rates
The Small Business Rate Relief scheme is being extended so that, for a year from October, many small businesses will pay lower business rates - or none, in some cases.
Stamp Duty
As has been very widely publicised, the stamp duty threshold on houses has been increased to £250,000 for the next couple of years. Note that it's for first-time buyers only, which is fair enough.
Overall, there was very little to affect the behaviour or outlook of business owners - but this close to an election, that's only to be expected. The second budget of the year may be more interesting.
Comments