Showing results for 
Search instead for 
Did you mean: 

2016 Budget low-down and how it will effect Pioneers

Thought Leader

2016 Budget low-down and how it will effect Pioneers

Most Budget speeches contain little more than a passing reference to the idea of small businesses and entrepreneurs before rushing off to talk about big business issues again. Not this one. Small business owners were surprised and delighted to find several measures in this year's Budget which will really help them run their enterprises more effectively.

Easily the most significant improvement was Chancellor George Osborne's decision to release thousands of small businesses from the burden of paying business rates, a tax which is normally payable on commercial premises such as shops, factories and showrooms. Shopkeepers had long complained that having to pay business rates put them at a disadvantage to online retailers who don't need to pay for expensive High Street premises and was a significant cost burden on their businesses. In response the Chancellor scrapped business rates for all firms with properties with a rateable value of less than £12,000. This means that 600,000 small businesses will now pay no business rates at all, equal to an average saving per business of £6000 a year. A further 250,000 firms will pay lower rates.

In an unexpected move, the Chancellor also introduced two new £1000 tax allowances for micro-entrepreneurs who sell products or rent out their homes online, for example through eBay or Airbnb, meaning that they can now keep the first £1000 of profit they make without having to declare it or fill in any forms.

There was also good news about Corporation tax. The Chancellor announced that he will be cutting from its current level of 20% to 17% by 2020.

Another significant improvement was to Capital Gains Tax, the tax you pay on any gains you make when you sell your business. The Chancellor announced that he is reducing the rate of Capital Gains Tax for higher rate tax payers from 28% to 20% and for lower rate taxpayers from 18% to 10%, both significant reductions.

There was good news too for the UK's 3 million sole traders and self-employed as Osborne abolished the payment of Class 2 National Insurance contributions, a move which will save them an average of £134 a year.

Other good news for small business owners included a continuing freeze in fuel duty, which translates to a saving of £270 a year for a small business with a van.

The measures were welcomed by small business organisations. Mike Cherry, Policy Director at the Federation of Small Businesses, said: “In a Budget constrained by both the need to reduce the deficit and the economic outlook, the Chancellor has listened to our calls for the tax system to be made simpler for small businesses and the self-employed and taken important action on business rates.”

He added: “The combined measures announced on business rates – the single biggest tax cut in today’s Budget - will be viewed by our members as a welcome and important step on the road to fundamental reform.”

Emma Jones, the founder of Enterprise Nation, a small business support network, said: “The budget has been good for small businesses and the self-employed. The best news of all is the permanent reduction in business rates, which will offer a big boost to the increasing number of independent retailers and producers we see every day looking for a foothold on our high streets.”

Meanwhile Dr Adam Marshall, Acting Director General of the British Chambers of Commerce, said: “Business wanted a steady, workmanlike Budget, and that’s what we got.  The Chancellor listened to our calls to avoid higher business taxes and costs – and indeed moved to lower them in a number of areas. He has finally taken real action to lessen the crushing burden of business rates, and sharpened incentives for entrepreneurship and investment.”