Small businesses have generally given Chancellor George Osborne’s Budget the thumbs-up this week and have particularly welcomed the long-awaited reform of business rates and business rate relief being doubled.
As of April next year, 600,000 small businesses will not have to pay business rates at all, while a further 250,000 will pay lower rates. Meanwhile, Mr Osborne announced that corporation tax would be cut to 17 per cent by 2020. These reforms will be funded by capping debt interest payments used by larger firms to cut their corporation tax bills to 30 per cent of earnings.
Describing his business tax reforms as part of a “Budget for small business”, Mr Osborne announced that he is permanently raising the threshold for small business rate relief from £6,000 to a maximum of £15,000 and increasing higher rate tax relief from £18,000 to £51,000.
Mr Osborne also announced a number of reforms designed to help small businesses cope with what he called “the great unfairness” they faced when trying to compete with some suppliers selling goods online. He said that the Government would take measures to stop overseas retailers storing goods in the UK and then selling them online without paying VAT.
In addition, the Chancellor introduced two new tax-free allowances worth £1,000 a year for so-called micro-entrepreneurs, meaning people who make money from occasional jobs or through renting out property they own.
Business groups also welcomed the help for small business, with a spokesman for the Federation of Small Businesses (FSB) saying he was delighted that the Chancellor had evidently listened to the group and had taken “important action on business rates”.
Meanwhile, a spokeswoman for the CBI business lobby group, said that the reduction in the headline corporation tax rate sends out a strong signal that the UK is open for global business investment, and reforms to interest deductibility are rightly in line with the international consensus.