George Osborne has delivered the final budget of this parliament, with the election just a few weeks away. It will be some time before the pundits come out with their full budget analysis but doubtless if you pick up any newspaper tomorrow you’ll find out how the announcements will affect your family’s income. In the mean time here are some highlights that will impact your business:
Income Tax, National Insurance and Corporation Tax
The current £10,000, scheduled to rise to £10,600 this year, will go up to £10,800 and then to £11,000 next year.
The 40% tax band will rise from £41,865 to £42,385 this April and go up to £42,700 for the 2016-2017 tax year and £43,300 in 2017-2018.
The National Insurance Employers pay for under 21 year olds is to be abolished from April and for young apprentices from April 2016. Class 2 National Insurance contributions for self employed workers is to be scrapped entirely in the next Parliament (assuming of course the chancellor is still in charge of the budget!)
Corporation tax is to be slashed to 20% from April.
Ending the annual tax return
By 2020 millions of brits will no longer have to complete an annual tax return. Paper returns are to be scrapped and replaced with online tax returns which can be automatically updated throughout the year. This will actually help those who claim under the new Universal Credit system as you’ll have to submit business returns monthly anyway.
Potentially salaries, accounting software, bank accounts and pension income could all be automatically collated and entered into you tax account negating the need to collect receipts and other documents.
You’ll also have the option to pay your income tax in instalments which could better reflect your circumstances as income rises and falls, rather than two large bills payable in July and January.
55 million people will have digital tax accounts by 2020 and it’s expected that some 10 million self employed could have digital tax accounts as early as 2016.
Apparently this will reduce the time needed to arrange your tax affairs from 40 minutes per year to 10 minutes. I wouldn’t know, I leave it all up to my accountant!
National minimum wage
If you’re an employer then your salary bill will be going up, if you pay the minimum. The National Minimum Wage will rise by 3%, an additional 20p an hour to £6.70 from October.
Beer and Fuel
1p off the price of a pint is always welcome news. Duty on Cider, Scotch and other spirits is to be cut by 2%. Wine duty isn’t going down but at least it’s not going up either.
Fuel duty has been frozen and the planned increase scheduled for September this year has been scrapped.