Last week’s 2016 budget announcement by Chancellor George Osborne was tipped to be important for small business. Before his speech, Osborne tweeted: “Today’s budget puts the next generation first: delivers surplus, improves schools & health, boosts savings & small biz, backs working people”.
Key highlights included a levy on soft drinks, an increase on ISA limits and a freeze on fuel duty for the sixth consecutive year, saving £75 for the average driver.
But what does the budget mean for small businesses and fleet managers? How will reforms affect your enterprise for 2016? We’ve analysed the key points:
Rate relief
After campaigning for business rate reforms, the creation of a business tax road map setting out the government’s plans to 2020 has well received by the entrepreneurial community. Small business rate relief is set to increase from £6,000 to £15,000 from April 2017. Osborne said this effectively means that 600,000 businesses will pay no rates at all and 250,000 small businesses will pay less.
Changes to National Insurance
From April 2018, Class 2 National Insurance Contributions (NICs) will be scrapped for the self employed. This means that only one type of NIC will be payable – and only if you make a profit of £5,965 or over per annum. As well as saving you money, this will also save you time when it comes to filling in your tax return.
Infrastructure
Extra spending was announced for rail and road links, particularly in the north of the country. The government has committed to investing in High Speed Rail 3 (HS3), cutting journey times to around 30 minutes between Leeds and Manchester; more money has been allocated to Crossrail 2 to connect South West and North East London; and there are plans to turn the M62 into a four-lane motorway. The latter has been allocated £161m and includes improvements to northern roads, such as the A66 and A69. Think about how this may affect the number of drivers in your fleet, distribution costs, and the time saved travelling to meetings.
Fuel duty and tolls
For the sixth year in a row, the fuel duty will remain at 57.95p per litre. While reductions are always appreciated, the certainty of this means small businesses won’t need to amend their projected expenditure this year, when it comes to planning fleet fuel spend. Osborne has also promised to halve the tolls on the Severn River crossing, so if your fleet regularly travels this way, you can start planning where to invest the savings.
Reform of the tax system
The announced reform of the tax system is expected to benefit small companies. The measures are set to raise almost £8bn, with new rules to prevent multinational companies avoiding paying tax in any of the countries they do business in, and making sure off-shore property developers are taxed on their UK profits. With these changes, there should be a strengthened support system for small businesses.
Stamp duty cuts
Looking to move to a bigger office, or a better location? The reforms surrounding Stamp Duty Land Tax on non-residential property transactions will help. Commercial stamp duty will be a 0% rate on purchases of up to £150,000, 2% on the next £100,000 and a 5% top rate on property bought for more than £250,000. If you’re looking for new premises, now may be the time to kick your search up a gear.
Extension of Entrepreneurs’ Relief
Entrepreneurs’ Relief is a reduced level of Capital Gains Tax on business disposals (when you sell or ‘dispose of’ part of your business) that took effect from the 2008/2009 tax year onwards. It will now be extended, specifically to encourage investors to back unlisted companies, and the Chancellor has added an additional £10m of relief on top of the existing limit.
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