The Budget 2016: How Does It Affect Your Business?

The Budget 2016: How Does It Affect Your Business?
Every March sees the return of The Chancellor of the Exchequer to deliver the Budget. This time around the usual increases were there, a rise in cigarette tax and on wine, as well as increases on personal allowances. However, when you dig a little deeper there are a lot more changes that may affect you and your business than you may have initially thought.

Corporation Tax
One of the bigger pro-business moves the Conservatives delivered in this year’s Budget was the announcement of the rate of corporation tax falling. Currently companies are charged at 20% on their company profits, however by the year 2020 this will have fallen to 17%. While 3% may not sound like a lot, it could have a big impact on medium sized companies.

Business Rates Relief
Perfect for those businesses which are much smaller. Business rates can be a significant expense on small local businesses and the increase in the threshold for 100% relief has increased. This move should see the high street benefit as more independent owners can afford to set up shop. Currently the threshold for 100% relief is set at £6,000 with it increasing up to £12,000. Furthermore the higher rate threshold is currently set at £18,000 but will now be rising to £51,000. This will mean up to 600,000 firms will now be exempt.

Commercial Stamp Duty
The method of calculating stamp duty on commercial properties has been reformed as well. This news will benefit entrepreneurs and businesses across the country. Previously calculating as a flat tax rate on the whole of the property, it is now calculated in the same way as income tax. Previously if the property value was in the upper band by £1 you could have seen a significantly higher stamp duty bill. The new thresholds will be 0% from £0 to £150,000, then 2% between £150,001 and £250,000, then 5% on everything higher. This is very beneficial to smaller firms, however with the new initiative expected to raise an extra £500m a year, it will be the larger firms that are hit harder.

VAT Avoidance
Many UK online sellers have complained that companies purposely avoid paying VAT allowing them a competitive advantage. Usually done by a company based outside of the UK, this allows them to offer the same goods for a lower price. This issue has been noticed and measures have been promised to stop it. However while it is good news hearing this signal of intent, there has been many similar promises in the past with little result.

The Wider Picture
There were many other changes that were announced which were not quite strictly business related. An announcement of a longer school day and the transition of state schools to academies upset already overworked teachers. Many spending cuts were announced, and a newly proposed sugar levy on all carbonated drinks were put forward. A new saving initiative was received enthusiastically, with the government contribution 20% of savings up to a total of £1000 tax free a year to be put towards retirement or a buying a house.

Overall the budget was received positively, however many do question how much of an impact the cuts will have.