UK Budget 2016 – News for Businesses and Entrepreneurs
On 16 March, George Osborne the UK Chancellor (Finance Minister) claimed new Budget 2016. The Budget sets out long-term solutions for the investment and economy, building an environment of supports and savings for the next generation. In order to meet financial targets, Mr Osborne announced that £3.5 bn of extra spending will be cut by 2020.
- Income tax starts to be paid when your earnings reach £11,500, the higher level is from £ 42,385 raise to £45,000 paying 40 per cent tax from April next year.
- Personal Allowance raises to £11500 in 2017-2018.
- Corporation tax will be reduced to 17% for the Financial Year commencing 1 April 2020.
- Capital Gain Tax cuts from 28% to 20%, the lowest rate in the G20，it will be 19% in 2017 and 1% further cuts in 2020.
- New Allowance at £1,000 for both ‘micro-entrepreneurs’ and online overseas retailers.
- Relief 600,000 small businesses from pay rates.
Osborne’s Budget brings great news to the setups and entrepreneurs. Since 2010, the government plans to delivery security of economy for British businesses. In particular, providing strong and stable infractions which small businesses need.
Competitive Tax Rate
Budget 2016 produces a low business tax for the companies and small businesses compared with the other members of Group Twenty. According to the legislated plans, British corporate tax will be the lowest in G20 at 17% compared with the US 40%, Russia 20% and China 25%.
Cuttings of Corporation tax are boost enterprises
The main corporation tax will be cut from present 28% to 20% this year and 17% by the year of 2020. A further increase in allowance of £3,000 will begin from April 2016 in order to cut the cost of employer National Insurance contributions to £2,000 annually. The new budget also supports these small businesses by relief tax from purchasing commercial properties. Mr Osborne claimed that at least 500,000 people would benefit and there would be no tax return forms to fill in. That is because the new £1,000 allowances for “micro-entrepreneurs” who is doing businesses online, such as eBay, Amazon and other online platforms.
Capital Gain Tax
CGT will also be reduced from 28% to 20%, and the basic rate will be 10%. Individual’s main property is not the subject to CGT and exempted by Private Residence Relief. For those people who purchase British real estate which is considered to be a second residential property will be liable to an 8% higher rate of stamp duty. However, the government are delivering a tax cut for smaller businesses, who purchase less expensive properties. The new rates will be 0% for the portion of the transaction value between £0 and £150,000; 2% between £150,001 and £250,000; and 5% above £250,000.
Additionally, the new sugar tax levied from soft drinks industry has been set out in concern about the obesity of young generation. Producers will be taxed according to the quantity of the sugar-sweetened drinks.
In short, the new budget brings a delight help for small businesses, particular to new setups. Both tax relief from Corporate Tax and Capital Gain Tax provide the brilliant opportunity to boost enterprises. However, if you are a property investor of buy-to-rent, you will levy a higher CGT.