5 Budget Announcements that Will Affect Your Business

Last month, the Chancellor of the Exchequer gave his Budget to Parliament. As the final budget before the general election, it showed a significant improvement in many important areas, including those that will affect business. Initial analysis concludes that the reforms and proposals put forward could support a better way of doing business, one that will be more effective and make people more money. The budget also recognised the importance of the self-employed workforce to the British economy. So, here’s a summary of 5 things announced in the budget that may affect your business.

The Abolition of the Annual Tax Return
According to the budget, millions of people will have the information that is needed by HMRC automatically uploaded into new digital tax accounts. It should be much simpler this way, as businesses will feel like they are paying a simple, single business tax. For most, the information needed will be automatically received, making the process much less hassle. It is estimated that 55 million people will have digital tax accounts by 2020, and expected that approximately 10 million self employed could have digital tax accounts by 2016.

Class 2 National Insurance Contributions Abolished
Although the details of this haven’t been revealed in full, Class 2 National Insurance Contributions for self employed workers are to be abolished in the next Parliament and Class 4 National Insurance Contributions are set to be reformed to introduce a new contributory benefit test. The National Insurance Employers pay for those under 21 year olds is also going to be abolished from April, and for young apprentices from April 2016.

Increase in Personal Tax Allowance
The tax-free personal allowance, which is the amount that people earn before they have to start paying tax, will rise to £10,800 in 2016-17. It will then rise to £11,000 the following year. To make sure that higher rate taxpayers see the full benefits of the personal allowance increase too, the government will increase above inflation the point at which higher earners start paying 40% tax. It will increase by £315 in 2016-17, and by £600 in 2017-18, taking it to £43,300 in 2017-18.

Changes to the National Minimum Wage
The National Minimum Wage will rise by 3%, an additional 20p an hour to £6.70 from October. Therefore, if you’re an employer paying the minimum wage then your salary bill will be going up.

Business Rates Review
According to the budget, a comprehensive review of Business Rates has been launched, and the government also plan to introduce schemes that reward additional growth to business rates. It states that “the government wants to ensure that the tax system provides stable and sustainable revenues to fund public services in the least distortive way” and as such will conduct a broad review of business rates to ensure they are still appropriate within a 21st century economy.

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