One of the most important tax changes for small Limited Company owners was announced in…
The Chancellor delivered his 2016 Budget speech this lunchtime. He covered off a lot of ground for small business owners, whilst still being vague about some of the timescales and exact impacts.
As ever in these speeches, the devil is in the detail. We won’t know the exact impacts and rule changes for a little while. As soon as we do, I’ll be sending you an update.
I’ve covered off the main relevant points as we know them are:
Corporation tax rates will be cut to 17% by April 2020. The dates for the incremental steps from 20% to 17% are yet to be revealed
Personal allowance will be increased to £11,500 from April 2017
The higher rate limit will be increased to £45,000 from April 2017. This is the first time in years that we’ve had an above inflation increase in this rate. For those taking dividends and therefore subject to the dividend tax, it’ll save around £500 in tax from April 2017
Some great news on Business Rates. Until now only properties with a rateable value of less than £6,000 were exempt from buisness rates. The Chancellor had brought in a temporary relief for slighly bigger businesses, but that was due to end this year. He has now confirmed that business premises with a rating value of less than £15,000 will be exempt from rates permanently. These savings will go a little way to offsetting the increase in costs of Auto Enrolment and the living wage.
Capital Gains Tax will be cut from 28% to 20%. Good news for those who have assets they are looking to sell. It’s definitely worth hanging on to find out when the new lower rate will be in place.
Terrible news for those companies with overdrawn directors loan accounts. There has always been a tax charge on loans outstanding over £5,000 for more than 9 months after the year end. Previously this charge has been 25% of the loan value. The Chancellor has announced that this rate will increase to 32.5%
There will be an introduction of two new tax breaks for “The Digital Age” of £1,000 each. They will cover those who trade online and those who work from home. There are no details on what each one covers, or how to claim the, as yet.
There was comment made about personal service companies (PSC’s) that supply the Public Sector. The Chancellor has always been keen to “beef up” IR35. If you’re a contractor supplying the public sector you definitely need to keep an eye on the news!
Finally, some great news for savers, both under and over 40! The overall ISA limit will be increased to £20,000 per annum. If you’re aged under 40, there’ll also be a lifetime ISA, where is you save £4,000, the government will top up with a further £1,000. Nice!
As more details become available, we’ll keep you updated. Especially when we know what the impact will be on your business