By Andrew Neill
Following budgets last March and July and the Autumn Statement in November, George Osborne was back at it again this week delivering the updated March 2016 Budget. So what do you the business owner need to know. Below are a few key areas worth noting.
Corporation Tax
Finally, after years in the making, the corporation tax is being reduced down from 20% to 19% in April 2017 and then down to 17% in April 2020. This change is a welcome relief, as it will help offset the increase in costs because of the national wage increasing. From 1 April 2017, businesses will be able to carry forward losses against profits from other sources of income or form other group companies. Of course for those based in Northern Ireland the future of even lower corporation tax rates looks positive.
Business Rates
Reorganisation of business rates, which will result in some 600,000 businesses having the tax burden of their property removed from 2017-2018. This equates to an increase in rates exemption from £6,000 to a maximum of £15,000 for small businesses. The higher rate limit will also increase from £18,000 to £51,000.
Lifetime ISA
From April 2017 for those who are aged under 40, will be able to save up to £4,000 each year into the Lifetime ISA, and receive a 25% contribution from the government each year. For every £4 saved the Government will add an extra £1. This top up will last until savers are 50. The saver can then withdraw this money when they turn 60. Early withdrawals will result in no bonus and a charge. There are some exceptions to the rule such as the Government’s top-up which is tax free to a first time buyer of up to £450,000, if they have a terminally ill-health condition. This combined with changing dividend taxes on 6 April 2016 are significant for most SMEs.
Allowances
The personal allowance will be increased from £11,000 to £11,500 in April 2017 for basic tax rate payers. The higher rate personal allowance (40%) is also increasing from £42,385 to £45,000. Also, Class 2 National Insurance contributions will be abolished from April 2018.
The above examples highlight a number of changes for business owners resulting from the budget. This list is by no means exhaustive of the changes outlined in the March budget. Please feel free to give Ross Boyd a call on 02895 320155 to keep up to date with tax and strategic planning for your business.