George Osborne put smaller companies at the heart of the 2016 Budget statement, bringing many positive changes for UK SMEs.
So what do the changes mean to your business? There are five specific areas where your enterprise may benefit from the reforms:
Business rate relief extended
For many businesses occupying bricks and mortar premises, the new £15,000 threshold for small business rate relief will be welcome news. This is the rateable value of the property below which small businesses will be able to claim a reduction of up to 100% on their bills. The new threshold is more than double the previous level of £6,000 and the Treasury says as many as 600,000 companies will now pay no business rates at all.
The Federation of Small Businesses describes the updates as a “big win”, though many of the changes won’t take effect until April 2017. Local authorities should extend the right concessions to qualifying small businesses automatically.
It is now important to consider how you can capitalise on the update. An extension of business rate relief could have a positive impact on business growth, so do think about how best to take advantage of this new opportunity.
Tax changes unveiled
The Chancellor announced a raft of tax changes that have the potential to affect small businesses, including a reduction in corporation tax down to 17% from 2020. A cut in the top rate of capital gains tax, from 28% to 20% will take effect immediately. This could be valuable to small business owners selling their companies, though many will in any case qualify for entrepreneurs’ relief, reducing their costs substantially.
At a personal level, self-employed small business owners will benefit from the abolition of Class 2 National Insurance contributions from April 2017 whilst increases to income tax thresholds that come into force next April will reduce the tax bills of many.
Infrastructure gets further investment
The Chancellor promised significant extra infrastructure investment, with HS3 - a new high speed rail line between Leeds and Manchester - as well as £250 million worth of investment in roads and an extra £700m in flood defence spending. Business groups have welcomed the announcements – the CBI, for example, had been campaigning for increased spending in this area.
Business owners have previously responded to the Close Brothers Business Barometer saying that poor infrastructure causes them problems. Now may be the time to consider how you can exploit new opportunities opened up by improved transport links.
Stamp duty system changed
The Government is changing the stamp duty rules on commercial property purchases so that it mirrors the charges on residential transactions. It has introduced new rates that start at zero for property values up to £150,000, increase to 2% on the next £100,000, and rise to 5% for a purchase price above £250,000.
The Treasury estimates that these reforms will raise £500m a year, so some buyers will pay substantially more. However, officials insist only 9% of buyers will be affected by the higher rates, while over 90% will see their tax bills cut or stay the same.
Fuel duty frozen
In another announcement welcomed widely by SMEs, the Chancellor also pledged to freeze fuel duty, saving the typical small business with a van an estimated £270 a year. The British Chambers of Commerce says the change will “keep transport and distribution costs competitive”.
With that in mind, many SMEs may now want to look at making further investments in their transport capabilities. Alternative funding options, such as asset finance, offer a range of flexible and tailored solutions for businesses looking to invest in this area.
All of the above changes to the Budget could have a significant impact on your business. Whether you plan to invest in property, increase your distribution network, or even purchase a company car, be sure to consider all of your funding options - including alternative finance solutions - which are designed to support cash flow and to help future-proof your business.
Take a look at our latest infographic: Investing for the future
