Chancellor draws up business tax roadmap

Francois Badenhorst
Practice correspondent
Sift Media
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Tax cuts for our “nation of shopkeepers” and tough talk on tax avoidance; therein lies the essence of George Osborne’s much-heralded business tax roadmap.

The roadmap’s stated aim is to give businesses clarity on the government’s tax plans through to 2020 so businesses can “invest with confidence”. And for small businesses there were a few welcome gifts.

Osborne’s war on corporation tax continued. The chancellor labelled the tax “one of the most distortive and unproductive taxes there is”, and announced that it will be cut down to 17% by April 2020 from the current 20%. Capital gains tax was also slashed from 28% to 20% for top rate taxpayers, and from 18% to 10% for basic rate taxpayers.

The business tax roadmap features the government’s plan to permanently double Small Business Rate Relief (SBRR) from 50% to 100% for businesses with a property with a rateable value of £12,000 and below. Businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief. There will also be an increase in the threshold for the standard business rates multiplier to a rateable value of £51,000, taking 250,000 smaller properties out of the higher rate.

Or as the chancellor said in one of the speech’s most animated moments: “A typical corner shop in Barnstaple will pay no business rates. A typical hairdressers in Leeds will pay no business rates. A typical newsagents in Nuneaton will pay no business rates.”

Class 2 National Insurance contributions (NICs) will be consigned to the history books from April 2018. “This will reduce the NICs paid by 3.4 million self-employed individuals by an average of £134 a year”, reads the roadmap document, “and will end an outdated and complex feature of the NICs system.”

In his speech the chancellor called the measures “a simpler tax system and a tax cut of over £130 for each of Britain’s 3 million strong army of the self-employed.”

The chancellor affirmed his commitment to “deliver a low tax regime that will attract the multinational businesses we want to see in Britain”. But offered this tax bonanza with the caveat: Taxes will be low, but must be paid.

Osborne announced that from April interest deductibility for the largest companies will be restricted at 30% of UK earnings. He also proclaimed hybrid mismatch rules to battle complex structures that allow companies to claim the same expenses in different countries and the beefing up of the withholding tax on the royalty payments that allow some firms to shift money to tax havens.

“Today’s Budget announcement was very small business friendly,” said Guy Ellison, Investec’s head of UK equities. “Osborne has continued to close tax loopholes for international companies paying little or no taxation in the UK, and limiting interest deductibility for certain highly leveraged companies.”

Chris Sanger, EY’s head of tax policy quipped, “This is a sweet and sour Budget, with big businesses paying for the cuts for small ones. There is the sweet taste of stimulus for small businesses, whether positively through business rates or neutrally in exceptions to tax relief restriction.”


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16th Mar 2016 16:32

nonsense, what about the ltd co?

very small business friendly?  Hows that then?

oh yeah, the rates that I wasnt paying anyway, the class 2 NI that I dont pay but was only threepence h'penny a week if you were.

You must mean that cut in CT in 4 years.....

Yeah real friendly

Thanks (3)
16th Mar 2016 17:13

Not optimistic, then?

What would've been an ideal announcement for you? 

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16th Mar 2016 23:16

I listened

Francois Badenhorst wrote:

What would've been an ideal announcement for you? 

I listened and will stop messing up the tax system and complicating it. And I realise that making businesses submit tax returns 4 times a year will be a huge cost to them and upheaval and be counter productive to business and growth -
So I resign
That would have been a great announcement from him.

Thanks (3)
16th Mar 2016 20:36

Corporation tax
What does his comment about corporation tax mean? I can't make sense of where he is coming from. Anyone understand?

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16th Mar 2016 22:45

Decrease in Corporation Tax, increase in dividend tax. Gee thanks.

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17th Mar 2016 08:40


The speech I would have liked to hear - 

I will not take much of your time today because last night a light flashed from heaven and gave me divine inspiration.  

I have reaslised that ever since the days of my good friends Gordon and Tony, every year, and sometimes two or three times a year we play around with some numbers so that Peter can become a little poorer and Paul a little richer but overall Britain doesnt benefit.

This is usually because next year it will be Paul's turn to be poorer and Peter's to be richer.

Of course we have told them both that they will be better off, by spinning them both around and around until they are so confused they dont know what to think.  All of this silliness just causes both Peter and Paul to get very angry when their accountant tells them the truth.

So in summary, it has been fun while it lasted but common sense must prevail, lets just leave things as they were.  This will be the last budget for at least the next 4 years.


Thanks (1)
17th Mar 2016 23:18

Well put
That's not too much to ask for is it? Just to be left to try to make some money, employee some people, train some people and not have to constantly react to endless changes and red tape. Take the politics out of tax and take george Osbourne and David Gaulke out of the tax system. That is on my Christmas list. Stop the tinkering and poor decisions. MTD will be one of the biggest disasters for the tax system ever - not needed. Just ask for some money sooner if you want. Don't distroy small businesses - open your ears and listen to us and stop being arrogant and think it is a good move. I doubt any more than 1% of people want it. And please please stop OTS with their look through idea. Very very stupid.

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