Corporation tax rates
As announced previously, corporation tax will fall to 19% from 1 April 2017. It was then due to fall to 18% from 1 April 2020, however, a further reduction to 17% from 1 April 2020 was announced in this Budget.
Class 2 National Insurance (NI)
Class 2 National Insurance (paid at a weekly flat rate by the self employed) is currently paid via direct debit or bi-annual bills.
The Chancellor announced that Class 2 NI will be abolished from 6 April 2018.
There will be a consultation on the reform of Class 4 NI (paid on trading profits).
New allowances for propety and trading income
From April 2017, there will be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property.
The new allowances will mean that individuals with property income below £1000 or trading income below £1000 will no longer need to declare or pay tax on that income. Those with income above the allowance will be able to calculate their taxable profit either by deducting their expenses in the normal way or by simply deducting the relevant allowance from their gross income.
A reminder that the new Dividend Tax Allowance of £5,000 a year will start from 6 April 2016 and the new rates of tax on dividend income above the allowance will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
Loans to Participators
In simple terms, these are loans from a limited company to its director/shareholders.
Tax is due on any balances not repaid within 9 months of the company year end. From 6 April 2016, the tax rate will increase from 25% to 32.5% to mirror the higher rate of dividend tax.
Small business rates relief was doubled from 50% to 100% and the threshold increased from £6,000 to £12,000.
This means that businesses occupying property with a rateable value of £12,000 and below pay no business rates. Those with a rateable value of between £12,000 and £15,000 will receive tapered relief.
The threshold for the standard business rates multiplier will be increased to a rateable value of £51,000.
Employment Intermediaries and tax relief for travel and subsistence
The government will introduce legislation in Finance Bill 2016 to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary.