Budget 2016: Big boost for small businesses
16 March 2016
Author: Rupert Saunders
The chancellor promised "a huge boost for small business and enterprise" through a "fundamental reform of the business tax system", starting with some changes announced in this Budget. His aim is to create a low tax system in the UK and ensure that businesses which operate here, pay taxes here.
The headline tax on company profits (Corporation Tax), which is currently 20% and is due to be cut to 18% next year, will be cut further to 17% by April 2020; that should attract more companies to the UK.
Meanwhile a series of technical changes to the way company borrowings and losses can be treated should close a number of loopholes that allow international businesses to avoid paying UK tax. There will also be a clampdown on internet resellers (he specifically mentioned eBay and Amazon) avoiding VAT by basing their holding companies abroad.
The threshold of small business rate relief (currently £6000) has been permanently raised to £15,000 and a higher rate threshold has been raised from £18,000 to £51,000. The government estimates around 6000 small businesses will pay no business rates and 250,000 businesses will have their rates bills reduced, as a result.
Future business rate rises will be linked to the CPI inflation measure, as opposed to the larger RPI measure.
There has also been a re-banding of stamp duty on the sale of smaller commercial properties with no tax on properties up-to £150,000 and a 5% band on properties over £250,000.
Plans for local business rates to be allocated locally are starting to take effect. From next April, the Greater London Authority will take full control of all business rates in its region and other regional authorities are likely to follow.