Is this year’s budget a budget for small businesses?
A few weeks ago, George Osborne, the Chancellor of the Exchequer, revealed the 2016 Budget. As to be expected, the budget has come under criticism from a number of different parties. However, small business owners as a whole were not being critical. Osborne revealed that this year’s budget was designed to put the next generation first. It has even been labelled as the budget for small businesses. The budget has also been devised to favour business owners who pay their fair share of tax, with there being a crack down on multinationals not paying their fair share of tax. So just what does the 2016 Budget means from a small business perspective?
Firstly, there have been a number of ‘devolution revolution’ policies outlined in the Budget. The Chancellor aims to build up the North of Britain, and there are many measures he has put in place to make the Northern Powerhouse a reality, as he puts it. This has involved improvements to road links across the North, such as the A69 and A66. He has also pledged that £161 million will be spent on transforming the M62. And given the go-ahead for High Speed 3, which will run between Manchester and Leeds. This will cut the journey time down by about thirty minutes. These improvements are expected to boost the economy in the North of Britain, making it easier for businesses to hire employees and build relationships with other businesses.
Other notable announcements include those on Fuel Duty and National Insurance. The average driver should save about £75 per year on Fuel Duty, as it has once again been frozen for the sixth consecutive year. This is a small but notable saving for business owners.
Another notable announcement for small businesses is the fact that business rates for all properties in England have been reduced. Over the next five years, the rate burden will be reduced by £6.7 billion, and approximately 600,000 small companies in the UK will not pay any business rates. This applies to all of those that have a rateable value that is no greater than £12,000. If you fall into this category, you will receive 100 per cent relief, with tapered relief if your premises are worth between £12,000 and £15,000.
In addition to this, by 2020, we can expect Corporation Tax to be reduced to 17 per cent. This had already been cut to 20 per cent in 2010, and the aim is to reduce it another three per cent to help small companies. Self-employed people are also reaping the rewards, as Class 2 National Insurance contributions have been scrapped. Capital Gains Tax has also been cut, and with immediate effect. It has been reduced to 20 per cent from 28 per cent, and the basic rate has also been cut to 10 per cent from 18 per cent. Overall the tax system will now be simpler for small businesses and that has to be good news.