George Osborne heralded it as a Budget that “puts the next generation first” and one which will see the Government “act now so we don’t pay later”.
Clifton Group’s Anthony Carty said there was no doubt the winners from the Budget were the SME community and savers.
“This was illustrated by the long overdue overhaul of business rates, the reduction in Corporation and Capital Gains Tax and the extension of the entrepreneurs’ relief,” said Financial Planning & Business Development Director Mr Carty.
What does the third Budget in the space of 12 months mean for business owners up and down the land?
The key highlights of the Chancellor’s eighth Budget include a doubling of business rates relief to help small businesses and a cut in Corporation Tax.
Capital Gains Tax will be slashed, the threshold for paying 40p tax raised and the tax-free personal allowance increased to £11,500.
“The increase in the tax-free ISA limit is a real boost for savers,” Mr Carty said.
“For the highest earners and big business I can only imagine the crackdown on tax avoidance and the continuing closure of varying loopholes will continue.
“I was very much a lone voice saying there wouldn’t be any changes to pension tax relief.
“Despite all the column inches devoted to the options the Chancellor was considering and all the talk of Pensions ISAs, it was my belief that nothing would change for the time being.”
Small business leaders have welcomed the reforms to tax policy and the doubling of business rate relief.
Mike Cherry, policy director at the Federation of Small Businesses, told BBC news: “The Chancellor has listened to our calls for the tax system to be made simpler for small businesses and the self-employed and taken important action on business rates.”
Here we take a look the key announcements and the impact on the SME community in the UK.
• Corporation tax, currently 20%, will be cut to 17% from 2020. Corporation tax was due to fall to 19% following the reduction from 28% in 2010 and 20% at the start of this Parliament.
• The headline rate of Capital Gains Tax is being cut from 28% to 20% for top rate taxpayers and from 18% to 10% for basic rate tax payers.
• The new threshold for small business rate relief is set to increase from £6,000 to £15,000, with the higher rate also being raised from £18,000 to £51,000. Business rates will be linked to CPI, the official measure of inflation.
• The rate at which people start paying top rate tax is rising to £45,000 from £42,385. The tax-free personal allowance will increase to £11,500 next year, above the £11,000 already announced.
• Corporation tax loss relief will become more flexible. Losses arising on or after April 1 2017 that are carried forward will be usable against profits from other income streams or the profits of other companies within a group.
• An extension of the entrepreneurs’ relief 10% tax rate to Capital Gains made by long-term investors in unlimited companies.
• Two new £1,000 tax allowances for property income and trading incomes to be introduced in April 2017.
• A restructuring of stamp duty tax (SDLT) on commercial properties, with higher tax bills on more valuable properties.
• An increase in insurance premium tax from 9.5% to 10% from October 1, 2016, to be used to finance additional flood defence expenditure.
• The abolition of Class 2 National Insurance contributions (NICs) from April 2018. Termination payments over £30,000, which are subject to income tax, will also become liable to employer NICs from the same date.
• No change to tax relief on pension contributions.
Turning to the economy Mr Osborne said growth was expected to be 2.2% this year, down from the previous forecast of 2.4%.
Growth has also been revised down for each year up to 2020, while Government borrowing is forecast to fall to 2.9% of GDP in the next financial year, to 1,9% in 2017-18 and 1%in 2018-19.
Mr Osborne also pledged a crackdown on tax avoidance by big firms.
Other eye-catching announcements included a new sugar tax on soft drinks to protect children’s health and longer school days signalling an end to the “Victorian” 3.30pm bell.
Every primary and secondary school will be on the way to becoming an academy by 2022 thanks to extra funding and around a quarter of secondary school will be able to opt in to offering a longer day from September 2017.
On savings, Mr Osborne announced that the tax-free ISA limit will be increased from £15,000 to £20,000 a year and a new Lifetime ISA for the under 40s, with the Government topping up every £4 saved with another £1.