In addition to the legal changes above, on 16th March 2016 George Osbourne announced the Spring Budget. Generally, the Budget saw positives for both businesses and individuals.
Spring Budget 2016: 7 key points
1. Reduction in business rates
The small business rate tax relief will double from £6,000 to £12,000 from April 2017. Whilst this is a positive for small business owners, the reality is that any savings made are likely to be re-directed to Pension Auto-Enrolment or paying the National Living Wage.
2. Tax cuts
Corporation tax will fall to 17% by April 2020. The higher rate of Capital Gains Tax will drop to 20% and the basic rate will drop to 10% from April 2016. Again, all positives to help small businesses and individuals and to encourage spending, but as stated above any savings for businesses are likely to be absorbed elsewhere.
3. Tax thresholds
There will be an increase in the personal allowance to £11,500 in the 2017/18 tax year and the higher rate threshold will increase to £45,000 from £42,385.
4. Termination Payments
From April 2018, termination payments in excess of £30,000 will be subject to National Insurance Contributions. Employers will need to beware; if you are considering making an offer to an employee after April 2018 make sure you bear this in mind so as not to be landed with a settlement payment that costs more than you originally intended.
5. Salary Sacrifice
Certain benefits paid by employers to employees may be restricted from salary sacrifice schemes to stop taxpayers from reducing their Income Tax and National Insurance Contributions. However pension savings, childcare and certain health-related benefits will continue to benefit from such relief.
6. Class 2 NICs scrapped
As of April 2018, self-employed people will no longer have to make Class 2 NIC contributions.
7. Childcare
A new tax-free scheme will be introduced from 2017. It will replace childcare vouchers, which will remain active until April 2018 while the new scheme is phased in.
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Please note that the information contained in this article was correct at the time of writing. There may have been updates to the law since the article was written, which may affect the information and advice given therein.
