Wow! The budget today definitely had some changes that will impact small businesses. You will now be able to take out more money from your business before paying tax and the point at which you pay higher rate of tax has increased.
Business rates will be reviewed, so hopefully that will help small businesses whenever that is carried out.
If you have savings then you will also pay less tax and be able to take advantage of flexible cash ISAs.
The key points of the budget that may impact you:
- Tax-free personal allowance to rise to £10,800 in 2015-6 and £11,000 in 2016-7
- The threshold at which point the higher 40% tax rate applies to rise to £43,300
- Employer NI contributions will be abolished for under 21s from 6th April 2015
- Review of business rates
- Transferable tax allowance for married couples to rise to £1,100
- New personal savings allowance of £1,000 on interest on savings income before taxed
- Annual savings limit for ISA increased to £15,240
- "Fully flexible" ISA will mean savers can withdraw money and put it back later without losing any of their tax-free allowance
- New "Help to Buy" ISA for first-time buyers whereby the government will give £50 for every £200 saved for a deposit
- Adult, youth and apprentice minimum wage rates to rise
- Pension pot lifetime allowance to be reduced from £1.25m to £1m from next year
- Law to be changed to allow pensioners to access their annuities, with 55% tax charge abolished and tax applied at the marginal rate
- Beer duty cut by 1p, cider by 2p, whisky by 2p. Wine duty frozen
- Tobacco and gaming taxes to remain unchanged
- Petrol duty frozen - September's planned increase scrapped
One thing that really came to my attention was the strap line “Annual tax returns scrapped!” What this actually means is that all “paper tax returns to be abolished” (most are online anyway apart from a few old timers) and by 2020 all annual self-assessments will be superseded by real time reporting of earnings throughout the year by online accounts. This reporting will all be online via PC, smartphone or tablets.
So tax will be paid throughout the year and I guess more in line with when the income is earned. This seems in line with what HMRC did with payroll as that is now reported monthly instead of annually. Although progress it also means that individuals will need to be up to date with their bookkeeping and not leave it to the end of the year.