Chancellor George Osborne’s Budget is good news for SMEs, not so much for big business, according to local experts.
“Small businesses and savers were the biggest winners, largely at the expense of big business,” said Brian Mulholland, Head of Corporate Tax at Locate in Kent partner Kreston Reeves.
“Business will be pleased by the one per cent reduction in Corporation Tax to 17 per cent by 2020. A reform of Small Business Rate Relief will mean 600,000 small businesses paying none at all, and more than half seeing a fall from April next year. Small business will cheer loudly.
“George Osborne announced similar changes to commercial property, creating a new phased Stamp Duty Land Tax (SDLT). This is a well-aimed populist measure, which is likely to be popular with small businesses. The changes will significantly reduce the SDLT burden for purchasing a commercial property.
“Commercial stamp duty land tax will have a zero rate band on purchases up to £150,000; a 2% rate band on £151,000 – 250,000; and a 5% top rate band above £250,000.
“There will also be a new 2% rate for high value leases with a net present value above £5 million. The Treasury believes 90% of transactions will suffer the same or less SDLT – a popular (and populist) message for small business.
“But Budget 2016 may well be remembered as the one when he largely took from big business to give to smaller ones and to savers, whilst both political and economic clouds were gathering with uncertain consequences. In the end, the Chancellor appears to have played a weak hand well.”
David Mellor, Chief Executive of Locate in Kent partner Crowe Clark Whitehill, said it was a shame that little was being done to reduce the complexity of the tax system.
However, he added that buried in the Budget documents was a Business Tax Roadmap that outlines the proposed areas for business tax reform over the next five to 10 years.
“This sets out the plans for what the Government is hoping to achieve by 2020. The general thrust is to ensure that the tax system is fit for purpose,” said David.
“Tax law might not get any easier to understand, but the Government hope it will be fairer and less open to abuse.”
Nick Threlfall, Senior Partner at Watson Day Chartered Surveyors, said the proposed changes to business rates mean that the small business relief has increased from RV £6,000 to RV £15,000. Furthermore, the sliding scale of reduced charges (transitional relief) has increased from a ceiling of RV £12,000 to RV £50,000.
“Business rates represent a significant cost to businesses of all sizes and a potential hold back for expansion plans or moves to better premises,” said Nick.
“The proposed changes to the business rates system from April 2017 will come as a welcome boost to many small businesses which will be taken out of the system completely, and to many more SMEs who will have a reduced burden as a result of the extension of transitional relief.”
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