The key points for small business are as follows:
The State of the Economy
- Growth of 2% forecast for 2016, revised down from 2.4% in November's Autumn Statement
- Forecast growth of 2.2% and 2.1% in 2017 and 2018, revised down from 2.4% and 2.5% four months ago
- Outlook for global economy is "materially weaker" and UK "not immune" to slowdown elsewhere
- The UK will still grow faster than any other major Western economy and is on course for a budget surplus
- A million jobs forecast to be created by 2020
- Inflation of 0.7% forecast for 2016
- Headline rate of corporation tax - currently 20% - to fall to 17% by 2020
- Anti-tax avoidance and evasion measures to raise £12bn by 2020
- Annual threshold for small business tax relief to be raised from £6,000 to a maximum of £15,000, exempting 600,000 firms
- From April 2017, small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates.
- There will be a tapered rate of relief on properties worth up to £15,000. This means that 600,000 businesses will pay no rates.
- £9bn to be raised by closing corporate tax loopholes and tax minimisation schemes
- Commercial stamp duty 0% rate on purchases up to £150,000, 2% on next £100,000 and 5% top rate above £250,000. New 2% rate for high-value leases with net present value above £5m. Effective from midnight
New tax allowances for money earned from the sharing economy
- From April 2017, there will be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property you own.
- People who make up to £1,000 from occasional jobs – such as sharing power tools, providing a lift share or selling goods they have made – will no longer need to pay tax on that income.
- In the same way, the first £1,000 of income from property – such as renting a driveway or loft storage – will be tax free.
Class 2 National Insurance contributions (NICs) for self-employed people scrapped from April 2018
- Currently, self-employed people have to pay Class 2 NICs at £2.80 per week if they make a profit of £5,965 or over per year. They also pay Class 4 NICs if their profits are over £8,060 per year. Paying Class 2 NICs currently enables self-employed people to build entitlement to the State Pension and other contributory benefits.
- From April 2018, they will only need to pay one type of National Insurance on their profits, Class 4 NICs. After April 2018, Class 4 NICs will also be reformed so self-employed people can continue to build benefit entitlement.
- An increase in the climate change levy to rise from 2019.
- £730m to back renewables.
Making sure large companies can’t artificially shift profits out of the UK
Over the next 5 years, the government will raise nearly £8 billion from large companies and multinationals through changes to the rules on interest and other measures, including:
- introducing rules to prevent multinational companies avoid paying tax in any of the countries they do business in, a technique called hybrid mismatches
- taxing outbound royalty payments better – these are fees for using intellectual property like patents and copyrights – meaning multinationals pay more tax in the UK
- making sure offshore property developers are taxed on their UK profits
Source: BBC, The Guardian, Treasury