Britain’s small businesses gave a cautious ‘thumbs up’ after yesterday’s Budget. There wasn’t as much in the Budget for businesses as in previous years. However, the business measures that were announced were focused primarily at helping small businesses.
Annual Tax Return
The Chancellor, announced plans to abolish the annual self-assessment tax return and replace it with a digital tax account. The Chancellor called the new system a “revolutionary simplification” of the tax return and will remove much of the red tape currently in place.
HMRC will automatically collate the tax affairs of millions of UK taxpayers from employers, banks and investment firms into a single digital tax account, which can be checked at any time online. Further details on the changes will be published later this year.
The Chancellor said about the new system: “Businesses will feel like they are paying a simple, single business tax – and again, for most, the information needed will be automatically received.”
The Chancellor promised a radical review of the business rates system. The current system, which has come in for some heavy criticism over recent times, has “not kept pace with the needs of a modern economy” and needs “far-reaching reform” said the Chancellor.
Business rates is a type of tax that is calculated according to the rental value of the property that a business uses. With many businesses now based on the internet, many have queried why a company should be taxed based on the physical space it uses.
Changes to the system are likely to help high street shops that are struggling to compete against their online rivals.
The review is expected to examine whether the smallest businesses should be removed from the system altogether.
- “Google Tax” – the so called “Google Tax” was further outlined yesterday. Companies that move their profits overseas to avoid tax will be subject to a “diverted profits tax” from April 2015. The tax aims to discourage large companies, such as Google, Starbucks, Apple and Amazon, from diverting profits out of the UK to avoid tax.
- As announced in the Autumn Statement 2014, the main rate of corporation tax reduces to 20% on 1st April 2015. Since the coalition came into power, the Chancellor has cut corporation tax from 28%.
- Class 2 national insurance contributions will be abolished from the next parliament.
If you would like to discuss how these measures might affect your business then please don’t hesitate to get in touch with one of our commercial solicitors on 0845 050 1958. Alternatively please complete the online enquiry form.