The Autumn Statement has closed and there was not a whole lot for small businesses and entrepreneurs. However, we have gone through the blue book with the finest of fine tooth-combs and dug the following out.
There were fears in the SME community that Small Business Rate Relief will be scrapped entirely, but an extension for 12 months to April 2017 was announced, helping the nation’s smallest firms to pay less tax on their premises.
Close to 405,000 of the smallest businesses will continue to receive 100% relief from business rates, with around 200,000 businesses will benefit from tapering relief. The government has however delayed revealing the findings of its review into business rates until next year’s budget.
Despite the rumours, entrepreneurs will be pleased to know that there won’t be any changes to Entrepreneurs’ Relief (ER). Even those entrepreneurs that might have been caught by the changes to ER made way back in the Summer Budget will be relieved to learn that the government will bring forward legislation, introduced by the Finance Act 2015, which will enable the relief to still be available on certain genuine commercial transactions.
As things stand now, Entrepreneur’s Relief will allow businesses to apply for tax relief up to £10 million lifetime allowance. This can save entrepreneurs up to £1.8m of capital gains tax on a £10m disposal of shares in a qualifying trading business.
Digital tax is one area that is set to become part of a ‘reformed and modern state’. It was revealed that UK’s small businesses and self-employed individuals will possess their digital identities by 2017, with a £1.3bn investment to “transform HMRC into one of the most digitally advanced tax administrations in the world”.
Osbourne said, “We’re going to build one of the most digitally advanced tax administrations in the world. So that every individual and every small business will have their own digital tax account by the end of the decade, in order to manage their tax online.”
We think this could increase the burden on small businesses as it will initially add another layer of red tape with businesses requiring assistance four times a year instead of once. Moreover, it will present challenges to bigger businesses with complex tax affairs.
Employees and pensioners won’t be part of the ‘modern and reformed’ digital tax world unless they have another source of income that pays them over £10,000 a year.