The media are already in a frenzy about the Government’s new Sugar-Levy which the Chancellor, George Osborne, announced on 16th March 2016, as part of his Summer Budget 2016. However, the Sugar-Levy, which is actually a tax on the amount of sugar in soft drinks, is not the key headline for our clients as business owners, individuals and the self-employed.
Corporation Tax – the main rate of Corporation Tax was already cut in 2010 from 28% to 20%, the lowest in the G20. The rate will be cut again in 2017 to 17%. The Government says that this will benefit over 1 million businesses
Commercial Stamp Duty – the way stamp duty is calculated on freehold commercial property and leasehold premium transactions will change. At the moment these rates apply to the whole transaction value. From 17th March 2016 the rates will apply to the value of the property over each tax band. The new rates and tax bands will be:
- 0% for the portion of the transaction value up to £150,000
- 2% between £150,001 and £250,000
- 5% above £250,000
As a result buyers of commercial property worth up to £1.05million will pay less in stamp duty.
Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5million.
Small Business Tax Relief – at the moment a small business that occupies a property with a rateable value of £6,000 or less pays no business rates. From April 2017, small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates. There will also be a tapered rate of relief on properties worth up to £15,000.
Insurance Premium Tax – this will rise from 9.5% to 10% to fund new flood defences in Leeds, York, Calder Valley and Cumbria.
Personal Tax – the tax-free personal allowance is currently £10,600 and was already due to increase to £11,000 in 2016. This will now increase further to £11,500 in April 2017.
The threshold at which people pay 40% tax is currently £42,385 and this was due to rise to £43,000 in 2016. This will now increase further in 2017 to £45,000.
Self-employed National Insurance Contributions – currently the self-employed pay two different NICs Classes: Class 2 at £2.80 per week if they make a profit of £5,965 or over per year; and Class 4 if their profits are over £8,060 per year. From April 2018 they will only pay Class 4 NICs.
Anti-tax Avoidance & Evasion Measures – The Government will raise £12bn by 2020 by instigating these measures. The Government has also said that they will raise £9bn by closing corporate tax loopholes. We know that they will be focusing on cracking down on tax avoidance by big firms; but it’s unclear at the moment if they will be focusing on other activities.
We will keep you informed of other issues in the Budget, once we have read the detail. However, should you have any queries please do not hesitate to contact Jackie or Andrew.