Energy News 16/06/2017
Michael Gove is appointed energy secretary, suppliers continue to fall short on digital offerings and global e...Read More
Balancing the books was a key Tory campaign vow and both cuts and increased revenue are central to the latest budget. The implications for SMEs are significant.
The recurring theme of Chancellor George Osborne’s speech was switching Britain from a high-spending, high-welfare, low-wage economy, to the opposite. Here’s what will matter most to small to medium sized business owners:
A Conservative election promise not to raise income tax, National Insurance or VAT (or even to change the items that VAT is levied upon) rules out the easy sources of increased revenue. For small to medium sized business owners, no increase in VAT and a cut to corporation tax, to 19% in 2017 and 18% in 2020, will likely be well received – Osbourne said that this means “Britain is open for business”.
Other good news comes from an increase the annual investment allowance to £200,000 (instead of £25,000) to incentivise investment by small and medium sized businesses.
Potentially more troubling for employers is the new compulsory ‘living wage’ for over 25s starting at £7.20 next year, rising to 60% of median earnings by 2020.
For personal incomes, the higher-rate tax threshold (when the 40p rate of income tax kicks in) will grow from £42,385 to £43,000 next year. The tax-free personal allowance will increase from £10,800, to £11,000 from April 2016, and to £12,500 by 2020/21 (so 30 hours a week on the minimum wage means no income tax).
Some business owners may be encouraged by the replacement of dividend tax credit with a new tax-free allowance of £5,000 on dividend income with higher taxes imposed on dividend income beyond that. Dividend tax rates will be set at 7.5%, 32.5% and 38.1%.
In a bid to both blunt criticism of being the ‘party of the privileged’ and to increase revenue, the Tory manifesto vowed to raise £7.2 billion from tax avoidance and evasion with the HMRC budget to be increased by £750 million. While the majority of these measures are to be aimed at “the rich”, SMEs with unusual/irregular tax affairs should think carefully about their accounting processes.
A vow to increase the inheritance tax threshold from 6 April 2017 from £325,000 per person with an extra £175,000 for property has proven popular among those that have seen the value of their houses soar. This will be balanced by restriction of tax relief on pensions for those earning more than £150,000 a year, with the lifetime allowance for relief dropped to £1 million. Annual tax relief on pension contributions is to be limited to £10,000 a year.
A consultation on whether the national six-hour limit on Sunday should cease, with local authorities and/or mayors now deciding how long shops can stay open. For most SME retailers, the situation will remain the same: shops covering less than 280 square metres (3,000 sq ft) will continue to be allowed to open all day.
Reforms to the energy market were conspicuously absent, although a recent Competition and Markets Authority report made some compelling observations. Nevertheless, business electricity and gas bills remain a nagging concern for many company owners. As experts in the SME business energy market, SwitchMyBusiness.com offers an obligation-free quote in minutes and can switch you to a new supplier in less than half an hour. Fill in the form at the top right of this page or give us a call on 0330 0100 251 to find out why we are the top-rated business compare and switch provider.
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