The Chancellor George Osborne announced his budget this afternoon to a packed out house of commons. The Budget is an annual update on the government’s economic plans. Today the Chancellor promised a budget for the next generation, with a new Lifetime ISA to help young people save. However, it was the promises made for small business and enterprise that really stood out to us.
A fundamental reform of the business tax system was one the biggest proposals set out by Osborne to level the playing field for small firms. This includes changing the rules to make sure multinational companies pay tax in the countries they operate in. The revenue raised from this will then be used to help the small companies "who pay their fair share of tax". Osborne also set our plans to reduce the rate of corporation tax for all businesses, down to 17% by 2020. Six hundred thousand small business owners will also feel the benefit of paying no business rates at all, making an annual saving of up to £6,000. Osborne was also keen to make his position on entrepreneurship clear - “we’re putting rocket boosters on the backs of enterprise”, he explained. To do this the government will be offering tax cuts to the self-employed, abolishing class 2 national insurance contributions for earnings below £5,695 and lowering capital gains tax to 20%. He also introduced a ‘tax break for the digital age’, with two new £1,000 allowances for micro entrepreneurs who sell their services online. Individuals who fall below the level of the allowance will no longer need to declare or pay tax on that income. The Enterprise Finance Guarantee will be extended to at least March 2018 to support over £250m of lending per year. The programme helps small businesses that might not get the loan they need because of a lack of sufficient collateral or a track record. The Budget has been welcomed by many small business owners, but what do you think? Let us know.