There was surprisingly good news for small businesses in the Chancellors budget!
The main items are summarised below:
The annual threshold for 100% relief on business rates for small firms to rise from £6,000 to £12,000 and the higher rate from £18,000 to £51,000.
Class 2 National Insurance Contributions
Will be abolished for the self-employed from April 2018. At the moment the self-employed pay Class 2 NICs if they earn a profit of £5,965 or more a year, but they also have to pay Class 4 NICs if their annual profit is more than £8,060 a year.
From April 2018 only Class 4 NICs will still be payable.
However the government explained that the system of paying these contributions would be changed to ensure the self-employed could continue to build up their entitlement to some contributory benefits, such as the state pension.
It remains to be seen if Class 4 NICs will be increased to make up the shortfall
Commercial Stamp Duty
For the first time, there is a zero rate band for commercial stamp duty. Small businesses will pay zero per cent on commercial property valued up to £150,000, two per cent on the next £100,000 in property value and five per cent over £250,000. The reforms are due to come into effect from midnight on 16 March.
To be frozen for the sixth year in a row
The not so good news is that
Insurance Premium Tax
Although only increased last November it has been increased by a further 0.5% to 10%. This will not only add to the cost of motor insurance but also other forms of insurance such as healthcare insurance costs, home insurance, and pet insurance. Life insurance is exempt.
We already knew that personal allowances were going to go up to £11,000 for basic rate taxpayers in April. It will rise to £11,500 in April 2017.
The threshold at which people pay 40% income tax will rise from £42,385 now to £45,000 in April 2017
Capital Gains Tax
The higher rate of CGT to be cut from 28% to 20%, this April. And In addition, CGT will be cut from the current 18% rate to 10% for basic rate taxpayers at the start of the new tax year, in three weeks’ time on 6 April.
However. The old higher rates will still apply to gains on the sale of a residential property that is not your main home (such as a second home or a buy-to-let property).
The annual ISA limit for regular ISAs for all age groups is to rise from £15,000 to £20,000 from April 2017.
A new Lifetime ISA has been introduced. Under the new plan, those under 40 in April 2017 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. So for every £4 you save, the government will add an extra £1. This top-up will last until savers are 50. The Isa can be put into any mixture of investment.
It is essentially a choice for the under 40s of whether to save for a house or a pension (it does not, of course, make property any more affordable) and seems to have been introduced instead of wholesale changes to the pension system
There will be conditions on how this is spent. Lifetime ISA account holders will be able to access all the funds, including the government top-up, tax-free to buy a first home of up to £450,000, if they have a terminal ill-health condition, or from the age of 60. There will be quite large penalties if savers dip in to these funds at other times.