Budget 2016: 600,000 reasons to be cheerful
Christian's view on the 2016 Budget, and why it's good news for small businesses
The two big headlines of the 2016 Budget were about slowing growth rates for the UK economy, and the introduction of a sugar tax in 2 years’ time.
But as ever, the small business headlines were found in the small print – and for once, they were mostly positive. And the long-awaited reforms to business rates – an unfair burden on SMEs – are a breath of fresh air.
Small business tax relief threshold raised
The tax relief threshold will be raised from £6,000 to a maximum of £15,000, and the higher rate from £18,000 to £51,000. This will mean that around 600,000 small businesses – and probably many of my own customers – will now be exempt from paying business rates. I’d say that’s a big win for small businesses.
Elsewhere, Class 2 National Insurance has been abolished for the self-employed, which should help more than 3 million entrepreneurs throughout the UK, and many more to come. Furthermore, a reduction to capital gains tax from 28% to 20% should give entrepreneurs even more incentive to grow their business.
But even more cuts to corporation tax
While another cut to corporation tax – from 20% to 17% - was presented as a positive for all businesses, in reality it will only benefit the big boys. This is perhaps where the 2016 Budget fell short of becoming a Budget for small business.
The biggest businesses in the UK really needed to be contributing more, not less, to the wider UK economy. This cut was misplaced, but in all honesty unsurprising. Elsewhere, there was plenty of talk of how multinationals will be forced to pay a fairer share of tax, but the ‘fundamental reform’ of the tax system was not explained in any detail. Only time will tell whether there’s any substance behind Osborne’s claims.
But no business rates for 600,000 small firms? We’ll take that. That’s 600,000 small businesses that now have a better chance of surviving, and then a real chance of growing.