Chancellor George Osborne announced a raft of measures for small businesses in today’s Budget.
The announcements will mean 600,000 small companies will not have to pay business rates from April 2017, saving nearly £6,000, the Chancellor said, and a further 250,000 will pay lower rates.
After months of pressure from small businesses, many of whom have complained bitterly about planned changes to dividends and consultation on quarterly tax reporting and the potential impact on their companies, the tax burden will be shifted on to larger firms.
Mr Osborne capped larger companies’ debt interest payments to 30% of their earnings. Those payments had been used to cut their corporation tax bills. The Chancellor said he expected that cap, and other measures, to raise £8bn over the next five years.
Corporation tax will also be cut to 17% by 2020 in what the Chancellor called a “Budget for small business”.
The threshold for small business rate relief is raised permanently from £6,000 to a maximum of £15,000. Higher rate relief goes up from £18,000 to £51,000.
The Federation of Small Business welcomed the changes. Its policy director Mike Cherry said: “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.”
The government is also taking measures to stop foreign retailers storing goods in Britain then selling them online without paying VAT, a bugbear for many UK small businesses who had felt there was not a level playing field for them.
There are also two new tax-free allowances worth £1,000 a year for “micro-entrepreneurs” who make money from occasional jobs or rent out property they own.
Companies making more than £5m a year in profit will have their past losses carried forward to offset corporation tax capped to 50% of current profits.
Opposition leader Jeremy Corbyn attacked cuts to disability benefits and criticised what he called “mates’ rates” corporate tax deals. He called the Chancellor’s statement “a Budget of failure” on the deficit, investment and inequality.
He attacked cuts to disability benefits and criticised “mate’s rates” corporate tax deals. However, Mr Corbyn welcomed a new tax on sugary drinks.
Mr Osborne has promised a £10.4bn surplus by 2019-20, but he has revised down growth forecasts and that could hit tax receipts in the future.
Severn tolls to be cut
Businesses in Wales have been campaigning for years for a cut in the cost of the Severn Crossings tolls, saying they are a serious dampener on growth in the Welsh economy. Mr Osborne announced they would be halved by 2018 when the bridges return to public ownership.
The current toll is £6.60 for a car, £13.20 for a van, and £19.80 for a lorry.
FSB police chairwoman in Wales Janet Jones said: “We welcome the 50% reduction in the Severn Bridge tolls announced by the Chancellor. A wide variety of our member businesses regularly use the Severn Crossings, and a study from the Welsh Government suggests that the tolls cost more than £100m each year in lost trade.
“This cut will have a positive impact for many small businesses, reducing the cost of trading across the Welsh border, and boosting confidence among small firms both sides of the border.”
Maria Williams is a copywriter, professional blogger, and PR for small business. Visit www.wordsyoucanuse.co.uk.