On 16th March Chancellor George Osborne delivered the 2016 Budget and it appears to be a welcome boost for small businesses. April 2017 will see a number of changes to policies including business rates, corporation tax and capital gains tax all of which will help small businesses.
Business rates have been reformed as the Chancellor added new thresholds for small businesses as well as increasing the higher rate relief. The new business rate relief will be increased to £15,000 from the previous £6,000, and for larger businesses it will increase to £55,000. This will have a significant impact for a number of Evans Weir clients who will not be paying any business rates for the foreseeable future.
The Chancellor announced that corporation tax will be cut to 17% by April 2020. This will mean less taxation on profits giving businesses an opportunity to further reinvest resulting in an overall improved economic productivity nationally.
Capital Gains Tax
The budget was also a major boost for investors as the Chancellor announced cuts to capital gains tax (CGT). As of April 2016 those who were paying the basic rate of 18% will now pay 10% and those who were on the higher rate of 28% will now be paying 20%. This new CGT rate is made to encourage investors to invest in businesses and will see Britain charge some of the lowest CGT rates in Europe.
However, it is not good news for those who have invested in residential property as they will not be eligible for the new lower rates. Instead, they will stay on the current rates which is now being viewed as a tax supercharge.
Overall, the budget appears to focus on maximising the opportunity for smaller businesses to develop. Cuts to business rates, corporation tax and capital gains tax will give small businesses the chance to reinvest and grow resulting in an overall economic growth across Britain.