Monday Motivation: Budget round-up

4 minute read time.

Wednesday’s Budget included some controversial measures but for small businesses, it was mostly seen as good news. The Federation of Small Businesses (FSB) said it “backed small businesses” and business owners were also positive. We take a look at the key changes and how they might affect you.

In the news, business confidence for the last quarter was down but businesses still plan to invest to improve efficiency and keep up with new technology.

Top news stories

UK small business confidence plummets

Confidence among Britain's small businesses is down, with Northern Irish and Scottish businesses the least confident in the face of a global economic slowdown and public sector austerity.

Efficiency and new technology are main focuses for business spending

Businesses are planning to invest this year in order to improve efficiency and remain competitive in their market, according to the latest ‘Attitudes to Business Investment’ survey from Lombard.

93% of online retailers don’t follow up with shoppers who don’t buy

Research showed that 93% of UK retailers do not send follow-up emails to shoppers who have browsed products online, but do not make a purchase.

HR managers spend two days a week on admin

A third of time is spent answering routine questions.

London and Manchester named best small business hubs

The research ranked 32 British cities for access to finance, talent and connectivity.

Key dates for your diary

25-28 March: Easter holidays

27 March: clocks change

31 March: World Backup Day. It’s a great time to review your backup protocol.

1 April: National Living Wage introduced.

1 April: The Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling and Compensation Cap) Order 2016

Budget roundup: what it could mean for your business

The Chancellor described it as a "Budget for small business". So just what was announced and what could that mean? Here’s the key things that might affect your business:

Tax and national insurance

  • No class 2 national insurance contributions for self-employed. These changes are due to come in from April 2018.
  • Increase in income tax thresholds. The lower rate will increase to £11,500 by 2017 and the higher rate tax threshold will be raised to £45,000 for 2017/18.
  • Increase in employment allowance. This will increase from £2000 a year to £3000 a year, from April 2016.
  • Two new online allowances, one for property and one for trading.This could affect those who sell on eBay or Etsy, rent their home out through AirBnB or rent out their drive as part of the sharing economy. The new £1000 allowance will be available automatically and those earning at or under that level won’t need to complete forms to declare this income.
  • New measures to stop multinational companies avoiding tax. This would address techniques used to avoid paying tax in countries where they do business, and to tax outbound royalty payments for intellectual property. 

Corporation tax

  • New lower rate of 17%, to be introduced by April 2020. The treasury said that one million companies will benefit.

Capital gains tax

  • Cuts to rates for the sale of businesses. From April 2016, the basic rate will fall from 18% to 10%, and the top rate will drop from 28% to 20%.

Business rates

  • New £15,000 threshold for small business rate relief. Higher rates will also be increased to £51,000. The chancellor said that changes would mean 600,000 small businesses would pay no business rates and a further 250,000 would pay less.
  • Business rates will be linked to CPI. This is the official measure of inflation, and is normally lower than the RPI rate currently used.

HR and payroll

  • Consultation on extending shared parental leave to working grandparents. The consultation, which will start in May 2016, will also look at simplifying eligibility requirements, improving the system to ask for leave and making better use of digital technology.
  • A new pension dashboard by 2019. This will allow people to see all their retirement savings in one place.
  • Salary sacrifice schemes - limit on benefits which attract tax and NIC relief. Pension contributions, childcare and health-related benefits, such as bikes for work, shouldn’t be affected.

Fuel duty

  • No increases. This is the sixth consecutive year that a freeze has been in place. Duty remains at 57.95p per litre.

Lending

  • More detail about small business funding referral scheme. The chancellor confirmed that the platforms will be Bizfitech, Funding Xchange and Funding Options.
  • Enterprise Finance Guarantee scheme extended to March 2018. This would support more than £250m of lending per year.

Other changes

  • Help to Grow scheme expanded. The scheme, which aims to help fast-growing companies achieve their potential, has been expanded up to £200m.
  • Spending on flood defences. £700m will be spent, which will be funded by a 0.5 percentage point tax increase on insurance premiums.
  • Infrastructure changes. There will be an £80m spend on Crossrail 2 and £60m on HS3.
  • Money Advice Service, The Pensions Advisory Service and Pension Wise merged into two new guidance bodies. These will be a new pensions guidance body and a new money guidance body.

Over to you

What did you think of the Budget? Let us know on the discussion boards.