The first budget from a majority Conservative government in almost 20 years has been announced this week and amongst the headline-grabbing social welfare reforms there is a mixed bag for business, especially the small to medium sized business that we, at Pure Contribution, specialise in.
We won’t bore you with an analysis of every announcement within the budget, but there is no doubt that many of the announcements will have an impact on your business in the near future.
It is true that the majority of reforms will not come into effect until 2016 or later but the time to act is now and, as forward thinking business owners, now is the time to take advantage of the tax reliefs that will be hit next year, as well as planning how to make the most of the reforms set to take effect in 2016, 2017 and 2018.
If you’re sitting there thinking – what exactly do I need to be planning? Let us help. Here is what you need to thinking about right now:
- Annual Investment Rate to increase from £25,000 to £200,000 for all qualifying investment in plant and machinery made on or after 1 January 2016:
If you are considering an upgrade on some of your working equipment, it makes sense to check whether it qualifies under these rules and postpone the upgrade into next year. Not sure if this applies to you? Contact us now – you can find the details here.
- Corporation Tax Rate Reduction to 19% from 2017 and 18% from 2020:
Now we know this is a long way off but now is the time to start planning how to take advantage of these reductions. A good way to do this is invest in that all important, but long forgotten, 3 year plan-out of the virtual filing cabinet. Dust it off, review and update.
- Personal Allowance, Basic Rate Limit and Higher Rate Thresholds:
What more is there to say another than: hurray, they are going up! Of course this means there should be more money in your pocket but are you making the most of them now and in the future?
- Tax Lock on Income Tax, National Insurance contributions and VAT:
As the saying goes: nothing in life is guaranteed except death and taxes, well at least from this week’s announcements we know none of these are going to go up over course of the next parliament!
- Replacement of National Minimum Wage to National Living Wage starting at £7.20 and rising to £9:00:
We know this is going to hit many businesses increasing their wage bill, but there are noted benefits to staff morale and productivity linked to the current optional living wage being operated. We cannot stress enough the early assessment of the impacts this may cause.
- National Insurance Employment Allowance for Small Business to increase 50% to £3,000 from 2016:
This has been an absolute life saver for many small business over the last 2 years and we are pleased it has not only remained but actually increased. Good planning will ensure you take advantage of this relief and use it wisely either to subsidise the increase in wages over the coming year or to invest in the business whether that be for training or equipment. Oops.. we’re back at those budgets and forecasts again.
- Dividend Tax Credit to be replaced with a new tax free allowance of £5,000 on dividend income:
Now this one is definitely a downside BUT good tax planning over the remainder 2015-2016 tax year and solid plans for 2016-2017 will help to minimise the impact and keep your liabilities to a minimum. This may all seem rather complex to explain in 2 lines so we recommend you get professional advice now to get your plans into motion. Of course we happen to offer excellent tax planning advice at Pure Contribution to all our clients, so why not arrange a meeting with us?
Now, there are far too many announcements and reforms to go over in one blog post, and with so many industry-specific policies to go over, we didn’t want to put you to sleep, but please know that we can help.
Pure Contribution prides itself on its hand-on and interactive approach to accountancy, so if you would like to know what you should be doing now and in the future, the first step is contacting us.
We can help you get those pesky (but necessary) budgets and forecasts ready, and part of our standard service is to help you monitor performance against these. You can be sure you will be getting the best advice to mitigate as many negative impacts as possible.
How to contact us:
Call: 01304 806080
Over the coming months we will be talking more in detail about the budget, how it will affect you and how we can help.