The Budget 2016: A 500-word summary for entrepreneurs and SME business owners
3 min read
16 March 2016
Chancellor George Osborne’s eighth Budget address since coming into power delivered a treasure trove of announcements for the leaders of small and medium-sized businesses – so here are all the important developments in one place.
Further cut for corporation tax
One of the hallmarks of David Cameron’s government, corporation tax is going to get another haircut, to 17 per cent by 2020. The tax has fallen from 28 per cent when the Conservatives first came into power in 2010 and is seen by Osborne to be “blazing a trail” for the rest of the world to follow.
Stamp duty and business rate reforms for small business
In a move that has been a long time coming, a new threshold for small business rates was unveiled, doubling it form £6,000 to £15,000. Meanwhile, the higher rate was also increased from £18,000 to £51,000. This means 600,000 small companies will pay no business rates at all and 250,000 will see rates drop.
Also, a raft of stamp duty reforms were announced for residents and businesses. Going forward, commercial stamp duty will have a zero rate band on purchases up to £150,000, a two per cent rate on the next £100,000 and a five per cent top rate above £250,000.
Crackdown on Google tax avoidance through restrictions on offsetting losses
While already something that has been mooted before, the chancellor touched on the launch of the Diverted Profits Tax, aimed at large firms artificially shifting profits offshore, which is due come into effect at the end of April.
Increased devolution of power to local authorities
Regions in Scotland, Wales and the Northern Powerhouse will be issued with new mayors, Enterprise Zones and tax cuts, the chancellor revealed. In the future, over half the population of the Northern Powerhouse will have a mayor.
Capital gains tax cut to 20 per cent to boost businesses
Another surprise addition, the headline rate of Capital Gains Tax will fall from 28 per cent to 20 per cent to encourage entrepreneurs to build businesses and create jobs. Alongside that, the basic rate will drop from 18 per cent to ten per cent.
More high earners out of top tax bracket
As well as a planned increase in the personal tax free allowance to £11,500 next year, Osborne also increased the higher rate income tax threshold to £45,000. This will, the government declared, take half a million people who shouldn’t have been paying the top rate out of it.