Given that we are only a few months away from the vote as to whether we stay in a reformed EU or exit, the Chancellor’s eighth Budget was undoubtedly not going to undermine the position of those, not least the Chancellor and Prime Minster, who want us to remain in the EU.
For the self employed and small businesses there was good news, with plans to reduce business rates and in some cases to abolish them from April 2017. In addition, those that are self employed are to benefit from the scrapping of Class 2 National Insurance. Equally it is estimated that over 1 million businesses are set to benefit from the further cut in Corporation Tax to 17% by 2020.
For the tax profession, possibly the main area of interest for which they await the full details is around changes to Capital Gains Tax (CGT), with proposed reductions seemingly set to benefit those subject to CGT on asset transfers and sales, including shares and business assets.
Equally the proposed new rates of Stamp Duty for commercial property transactions will be of mutual interest to those involved in commercial property transactions, be they investors, developers or agents alike. The new rates and tax bands will be 0% for the proportion of the transaction value up to £150,000; 2% between £150,001 and £250,000, and 5% above £250,000. Overall all those buyers of commercial property up to £1.05million will pay less in Stamp Duty. Could this change be a small boost for commercial property transactions, not least small businesses looking to expand?
The Chancellor made numerous references to looking after the next generation and putting them first, not least with re-affirmation that it is this Government plan to ensure by 2022 that all schools are an Academy or in the process of becoming one or being part of one. At present 42% of schools are part of the Academy network. The challenge, not least for many of the small schools and their governing bodies is the journey they now need to take to become part of the new order. With increased devolution and loss of support from divested and scaled down Local Education Authorities, the pressure is looming great for many a school governing body and head teachers as to the future of non converted schools. Further announcements around proposals and support for conversion may include a mix of ‘carrots’ and ‘sticks’ to cajole and coerce.
With plans to support schools and academies with additional funding for sport and the introduction of a levy on producers of sugary soft drinks, the Chancellor is certainly focusing on the next generation’s well being and education.
The Chancellor downgraded forecasts for economic growth for this year, attributing revised forecasts in part to reduced levels of UK productivity, global financial uncertainty and a decline in world trade – including from China. Equally, lower rates of increase in wages and reductions in tax revenues have impacted on overall revenues and therefore the deficit, as well as the long term debt, have not gone down as much as planned. The ability to fund the proposed changes is seemingly coming from his focus on clamping down on tax avoidance and evasion as well as ensuring large corporate and multi-nationals pay tax. Public sector cuts are also a contributor to his re-balancing act.
Overall it was probably a Budget for the self employed and small businesses, the back bone of the UK economy. Whether it was a Budget that helped to re affirm his position and/or the Governments as a whole, not least around the decision to remain in or come out of the EU, we will have to wait until the election on the 23rd June.
For further details and commentary on the announcements made and new tax rates, please read ourguide to the Budget 2016, download our app Streets iAccountant or watch our Budget 2016 videos on YouTube.
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