Was the Budget good news for Britain’s SMEs?
In the run up to the spring Budget a number of lobby groups and trade associations were calling on Chancellor George Osborne to introduce a range of measures to help small and medium businesses. So with the Budget speech delivered, how have SMEs in the UK fared?
One of the key issues for many groups was the area of business rates. Five of the UK’s biggest industry groups - the British Retail Consortium, British Council of Shopping Centres, Association of Convenience Stores, Federation of Small Businesses, and British Property Federation – were among the organisations calling for reform of the business rate system.
The property-based tax system, based on the rated value of a business’ physical premises, has been criticised for being outdated and for favouring online retailers. It was cited in a report by the British Retail Consortium as one of the factors that could see more than 70,000 shops facing closure and tens of thousands of small retail businesses facing business insolvency by 2025.
It was announced that business rate tax relief will permanently double from the current 50% to 100% per cent for properties with a rateable value of £12,000 or less. The reduction currently only applies to properties with a rateable value of £6,000 or less. Premises with a rateable value of between £12,000 and £15,000m, meanwhile, will be eligible for a tapered relief.
According to Mr Osborne, the move would free 600,000 small firms from business rates and see a further 250,000 paying less.
Additionally, corporation tax will fall from its current rate of 20% to 17% by 2020. Under previously announced plans, the rate was already due to fall to 19% in April 2017 and 18% in 2018. The Chancellor also announced that Class 2 National Insurance contributions for the self-employed would be abolished from 2018. This represents another tax cut for sole traders and partners in partnerships and LLPs.
Capital Gains Tax at the higher rate will also drop from 28% to 20% from April 2016, with the basic rate dropping from 18% to 10%.
By Phil Smith