George Osborne has delivered his seventh Budget. But did it include what small businesses want to hear? We take a closer look at some of the measures announced by the Chancellor and what impact they’ll have on firms up and down the country.
Business rate reform was high on many small businesses’ Budget wish lists and while the Chancellor stopped short of revamping the system completely, he did announce that the annual threshold for small business rate relief will be more than doubled from £6,000 to £15,000 from April 2017. This means 600,000 small firms won’t pay business rates at all, while 250,000 will see a drop in their rates – saving a collective £6.7 billion over the next five years. Small business groups have been jumping up and down with glee.
It was also revealed that the Greater London Authority will be given the power to set its own business rates from next April – three years earlier than expected.
Cuts to corporation tax are to go even further than previously announced, with the rate dropping to 17% in 2020. Business bosses have welcomed the move, saying it will have a transformational effect on start-ups, giving them the means to reinvest more of their profits.
In his speech, the Chancellor highlighted the need to “level the playing field” between small firms and their larger counterparts and announced plans to do just that through a series of tax measures including new rules to stop some multinationals avoiding paying tax anywhere. There are also plans to allow firms to use losses more flexibly in a way which will benefit around 70,000 mostly British businesses.
There was speculation about whether this would be the year fuel duty rose after five consecutive freezes, however it was frozen for the sixth time. This is great news for the 93% of firms who told the Federation of Small Businesses that cars are important to their company, particularly those based in rural areas with poor public transport links.
Improved infrastructure can only be good news for small businesses, with better rail links and roads making business travel easier and widening recruitment areas. News that new rail lines have been given the green light, including Crossrail 2 in London and the HS3 link between Manchester and Leeds, is sure to have firms across the country cheering.
The Budget wouldn’t be the Budget without a few surprises and this year’s shocker was that stamp duty for commercial property is being reformed. From midnight on March 17, stamp duty on the lowest value commercial properties will be cut, with nothing being paid on properties worth up to £150,000. There’s a two per cent rate on the next £100,000; and a five per cent top rate above £250,000. This could potentially save small businesses thousands. If you were buying some premises for £200,000 before the budget you’d have paid £8,000 in stamp duty but now you’ll pay just £3,000. However, those buying at the top end of the market will pay more.
Last, but by no means least, small businesses were given a helping hand to battle online retail giants thanks to a couple of new measures. Two new ‘digital tax breaks’ mean that micro entrepreneurs who sell products and services online can benefit from an extra £1,000 a year – which could be vital in helping them expand their empires beyond their bedrooms.
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