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AUGUST 2015 PRO INSTALLER
PRO BUSINESS
www.proinstaller.co.uk
Summer Budget 2015:
What’s in store for Small Businesses?
The Winners
and the Losers
As we Brits know only too
well, summer time can be
a tale of two halves. It can
bring glorious hot days, trips
to the beach and barbecues.
But it can also mean sun
burn, invasions of insects
and thundery downpours.
And that’s exactly how the story
went for small business owners in
July’s emergency Summer Budget.
Chancellor George Osborne set
out the first all-Conservative
budget for nearly 20 years, and
he stuck steadfast to his austerity
measures. As we’ve seen since the
recession in Budgets and Autumn
Statements, for every tax break;
there would be a tax rise elsewhere to compensate. There are
no unfunded giveaways.
The big headlines for our small
businesses and taxpayer clients
were the overhaul of the tax
treatment on dividends and the
changes to tax reliefs available to
landlords.
Thundery Showers
over Companies
Sunshine
Companies have probably been
the biggest losers from the Summer Budget. Although they will
benefit from the corporation tax
cut, the Dividend Tax Allowance
will likely leave many director-shareholders out of pocket.
The withdrawal of tax relief on
goodwill will also be a sorely
missed perk of going limited.
Combine this with what happened in Autumn Statement 2014,
when we saw the withdrawal of
Entrepreneur’s Relief on goodwill
transferred to a limited company and it’s quite clear that the
government are keen to reduce
the benefits of being a limited
company.
SMALL BUSINESSES
Here, in the adjacent table, we’ve
summarised the winners and
losers of the emergency Summer
Budget 2015:
Corporation tax cut - Corporation tax will fall further from 20% to 19% in 2017, and then to 18% in
2020; benefiting over a million businesses. Unfortunately, the rate of corporation tax for small and
large businesses will remain unified under current
plans.
Fuel Duty - The Chancellor also confirmed that
there would be no change to the plans he set
out for fuel duty in the Coalition’s last Budget in
March 2015. Fuel duty will therefore remain frozen
this year.
Showers
Dividend tax treatment overhaul - From April
2016 the dividend tax credit will be abolished and
replaced with a £5,000 Dividend Tax Allowance.
This will mean that the first £5,000 of dividends
received will be tax free, and then anything above
this will be taxed at 7.5% for basic rate taxpayers,
32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
Corporation tax relief on goodwill - Tax relief is
no longer available for goodwill purchased on or
after 8th July 2015.
Annual Investment Allowance (AIA) - This was
planned to fall to just £25,000 from 1st January
2016. But the Summer Budget announced it would
instead fall to just £200,000.
EMPLOYERS
Employment Allowance - In order to ease the
burden of the National Living Wage, the government will raise the Employment Allowance from
£2,000 to £3,000 a year from April 2016.
National Living Wage - From April 2016, a new
National Living Wage of £7.20 an hour for the over
25s will be introduced. This will rise to over £9 an
hour by 2020. Whilst this will be welcome news to
employees, this could hit small businesses hard.
Director-only companies and the Employment
Allowance - To ensure that the NICs Employment
Allowance is focused on businesses and charities that support employment, from April 2016,
companies where the director is the sole employee
will no longer be able to claim the Employment
Allowance.
PERSONAL
Tax lock - In their manifesto, the Conservatives
vowed there would be no rate rises to tax, National
Insurance or VAT for the duration of Parliament.
Personal allowance - Will increase from £10,600
this year to £11,000 next year.
Higher rate threshold - Will increase from
£42,385 this year to £43,000 next year.
Pensions Annual Allowance - For every £2 of
adjusted income over £150,000, an individual’s
Annual Allowance, will be reduced by £1, down to
a minimum of £10,000.
Inheritance tax - The government will take the
family home out of inheritance tax for all but the
wealthiest with a new transferable nil-rate band,
introduced from April 2017. This will apply when
a main residence is passed on death to direct descendants, such as a child or grandchild.
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