The budget last week was generally low on excitement, even for accountants, but there a few interesting points amongst the bad news about the economy and borrowing. So I’ve highlighted below some of the more relevant points that are likely to have a bearing on small businesses.
1.The big news here is a £2,000 annual employment allowance that can be used against employers national insurance. This will be done automatically through the new RTI payroll system. This is a significant incentive for small businesses with staff or who are thinking of taking someone on as currently employers pay national insurance on wages at 13.8%. The allowance comes in from April 2014. Note that employee’s national insurance and tax remain unchanged so it won’t make any difference to the employee.
2.The vat registration threshold increased from £77,000 to £79,000.
3.The small company corporation tax rate for small companies stayed unchanged at 20%. This is however historically very low and makes incorporation of businesses still an attractive proposition from a tax perspective. A sole trader making annual profits of £30,000 currently pays around £2,000 more tax than a company.
4.“Growth vouchers” are going to be made available to small businesses that they will be able to “spend” on professional advisors such as accountants and lawyers.
1.The personal allowance increases to £9,440 from April and to £10,000 in April 2014.
2.A tax free childcare scheme will become available from autumn 2015 providing working families with 20% of their childcare cost up to £1,200 per child. This will replace the existing voucher scheme that was only available to employees. The new scheme will also be available to the self-employed, which is excellent news.
3.The maximum amount a company can loan an employee with creating a tax charge increases from £5,000 to £10,000.
4.Employees receiving shares from their employers under certain schemes will not have to pay any capital gains tax on the first £50,000.