Summer Budget 2015 Overview for Small to Medium Businesses
The big headline from Chancellor George Osbourne’s first full Tory budget since 1996was a radical move to introduce a compulsory “living wage”, entitling over 25s to earn £7.20 an hour, rising to £9 by 2020. Kirkwood Wilson Accountants assesses the other marquee measures likely to affect small to medium businesses.
As part of Osbourne’s plans to make Britain a “low-tax, high-wage economy” nearly 30million workers are in line for an income tax cut, while employers were promised that their taxes would fall to help finance the compulsory new National Living Wage.
Summer Budget 2015 Headlines
Some of the headlines from the budget included:
- Tax-free Personal Allowance to increase from £10,600 in 2015/16 to £11,000 in April 2016.
- Higher rate threshold will also rise from £42,385 to £43,000 next year.
- New £1m maximum inheritance tax allowance from April 2017.
- Pensions tax relief reduced for people with an income over £150,000.
- Corporation Tax cut to 19% in 2017 and 18% in 2020.
- Annual Investment Allowance set permanently at £200,000 from January 2016.
- New £5,000 tax-free dividend allowance replaces the dividend tax credit from April 2016.
- Standard rate of Insurance Premium Tax will rise to 9.5% from November 2015.
- Tax relief restricted to 20% for all landlords by April 2020.
A crackdown on tax avoidance, including an end to permanent non-dom status and increased resources for HMRC.
Our account on matters
Caroline Wilson, Kirkwood Wilson Accountants Managing Director, thought the new Budget reforms would be largely underwhelming for small to medium business owners. “While the headline measure to introduce a ‘living wage’ is great news for employees, it is unclear how it will effect small to medium business owners in the longer-term,” said Caroline.
“The reductions to corporation tax could help to ease the pressure but it depends on how many low-paid employees a company has and its level of profitability. The increased tax-free personal and inheritance allowances are certainly a welcome boost for savers.
However, business owners and top-rate tax payers might be disappointed by the cuts in the Annual Investment Allowance and the changes to the old dividend system respectively. So, all in all, the summer Budget has been a mixed bag of results, with a relatively equal balance sheet of wins and losses.
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