The March 2016 budget was dubbed the ‘small business budget’. As well as widely reported benefits such as extending business rate relief, a number of other changes have also been proposed that could affect everyone from the self-employed to growing businesses.
1. Cut to corporation tax
The main rate of Corporation Tax will fall from 20% to 17%. This will make it the lowest rate in the G20, and benefits over 1 million UK businesses.
2. Class 2 National Insurance contributions (NICs) to be scrapped
From April 2018, self-employed people will no longer have to pay Class 2 NICs of £2.80 per week if they make a profit of £5,965 or more a year. This means they will only have to pay Class 4 NICs if they make over £8,060 annually.
Class 4 NICs will also be reformed from 2018, to ensure self-employed people can continue to make strong contributions towards their state pension.
3. New stamp duty rates for commercial property
Before March 2016, stamp duty was calculated based on the whole transaction value of a commercial property, whereas now the rates will only apply to the value of the property over a series of tax bands.
The new tax rates are:
- 0% on anything up to the value of £150,000
- 2% on anything between £150,001 and £250,000
- 5% on anything above £250,000
Buyers will also pay a lower rate of stamp duty on commercial property up to the value of £1.05 million.
4. More funding to protect businesses from flooding
After the devastating effect of winter storms on businesses in the North of England, an increase in Insurance Premium Tax will be used to fund new flood defences.
5. Fuel duty frozen
Fuel duty was frozen again for the sixth consecutive year, representing an average annual saving of £75 per car.