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Spring budget: key messages for small businesses

09/03/2017 02:18 pm

Chancellor Philip Hammond delivered a new Budget, which was not met cheerfully by most of small business owners. Here is the summary of the most important messages for small businesses.

The bad news

Increase in taxes for the self employed

  • Class 2 NICs will be abolished this spring.
  • Class 4 NICs will increase by 1% to 10% in April 2018.
  • Further 1% increase to 11% on Class 4 NICs in 2019.

Reduced tax-free dividend allowance

  • Tax-free dividend allowance will be cut from £5,000 to £2,000 from April 2018.

This cut means that a higher rate taxpayer receiving £5,000 of dividend income will now face almost £1,000 in extra tax.

The good news

Even though the new Budget did not make small business owners very happy, there are some good news as well.

Capping business rate rises

  • A cap was set so rates rise by no more than £50 a month for small businesses losing their rate relief in spring.
  • A relief package of £435m was set to help small businesses affected by the business rates increase.
  • Pubs will get a £1,000 discount on business rates of less than £100,000 rateable value.

Delay of Making Tax Digital

  • For unincorporated businesses below VAT registration threshold the introduction of Making Tax Digital and quarterly reporting was delayed by a year.
  • Such businesses will have to start filing tax information online from April, 2018.