The Chancellor has “Britain walking tall” today. His final Budget before the general election showed a significant improvement across the board. Today’s Budget also recognised the importance of the self-employed workforce to the British economy, with reforms and proposals that could support a more effective, lucrative way of doing business.
Here are our top takeaways for small businesses, freelancers and contractors:
Abolition of Class 2 National Insurance Contributions
Class 2 NICs will be abolished in the next Parliament and Class 4 will be reformed to introduce a new contributory benefit test. The details of this will be discussed later in the year.
Self Assessment tax return reforms
The government plan to “radically simplify tax administration by abolishing the annual tax return”, which will make tax simpler and enable tax and NICs to be collected through digital accounts instead of the annual self assessment.
Find out how the death of the Self Assessment will affect you.
Rise in Personal Allowance
The amount you can earn before tax is set to rise from £10,600 is 2015-16 to £10,800 in 2016-17 and £11,000 in 2017-18.
The upper tax threshold at which people start paying 40% income tax is also set to rise above inflation from £42,385 to £43,300 in 2017-18.
Review of Business Rates
A comprehensive review of Business Rates has been launched. The government also plan to pilot schemes that reward additional Business Rates growth.
The Budget states “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.
Local Authorities are also encouraged to use their business rates discretionary relief powers to support the sharing economy, which includes shared workspaces and maker spaces.
Improved access to finance and markets
The government aim to unlock the potential of the sharing economy, improve access to finance and boost exports. The Budget 2015 also announced funding for trade missions, focused on regional strengths.
The British Business Bank has published a request for proposals to pilot its Help to Grow scheme, which will make growth finance available to high potential firms. Alongside this, the government will do more to inform SMEs about the support already available to them and their options for accessing finance.
Better education and support for SMEs
SMEs will also gain further information on how to access and use legal services, which will be included on the Citizens Advice and the GREAT business websites.
£4 million will be provided to extend the existing Skills Investment Fund for a further two years, providing match funding for training and development in film, television, visual effects, video games and animation.
Tax on “diverted profits” will come into effect next month, aimed at multinational firms moving profits “artificially offshore.”
ISA reforms will allow savers to withdraw and replace money in the same tax year without losing their tax advantage.
Help to buy ISAs will be given a new twist to support those saving to buy their first home, with a maximum government bonus of £3,000 for those who save £12,000.
The lifetime allowance for pensions tax relief will be indexed by inflation from 2018.