Infographic – Budget 2015 what does it mean for your business?
Less red tape, investment in skills and infrastructure, support for innovation and (in an ideal world), a lower tax burden: these tend to appear on the wish lists of business owners when it comes to the Chancellor’s annual Budget. So what stands out among this year’s raft of measures? What does the Budget 2015 actually mean: both for established businesses and up-and-coming entrepreneurs? Let’s take a look…
The end of the annual tax return
Starting your own business requires getting to grips with self-assessment, which, at present, means the often-daunting prospect of the annual tax return. Digitalisation has already had an impact in this area in the form of online filing. The Chancellor went a step further this year, announcing the rollout of digital tax accounts as an eventual replacement for annual returns. Further details are contained in the accompanying guidance paper, Making tax easier: The end of the tax return. Here’s how business owners are likely to be affected:
By early 2016, 5 million small businesses and 10 million individuals will have their own digital tax account
The new system will be more akin to an online bank account: letting you register, file, pay and update at any time of the year, and will be mobile compatible
It’s not just about income tax: you’ll be able to view and deal with your IT, corporation tax, VAT and PAYE liabilities all in one place
By 2020, businesses will be able to link their accounting software to their digital tax account, enabling them to “manage their taxes all together, as part of their day-to-day running”
A “pay-as-you-go” approach is promised: enabling you to make regular, single payments to cover your liability across different taxes
The end of Class 2 National Insurance contributions
Another bill that’s all too familiar to entrepreneurs is the annual demand for Class 2 NIC payments. The abolition of this is promised “in the next Parliament”, along with a consultation on Class 4 payments. Expect this to be fleshed out with further announcements in due course.
Using your ISA to resolve temporary cash flow problems, without being penalised
Among the savings and pensions measures announced, the new ISA “withdraw and replace” provision may be of particular relevance to self-funded business owners. From this autumn, you will be able to withdraw and replace money from your cash ISA without this counting towards your annual subscription limit for the year (currently £15,000): so long as the repayment is made the same year as the withdrawal.
Fuel duty rise is off the cards
The RPI-linked Fuel Duty increase of 0.54 pence per litre that would have come into force on 1 September 2015 has been cancelled. According to HMRC calculations, this equates to a saving of £1,400 for a small business with a van and £21,000 for a haulier.
Support for tech and creative businesses
The Internet of Things is squarely on the Treasury’s radar. In his speech, the Chancellor committed £100 million for research and development into driverless car technology, and £40 million to “demonstrator programmes, business incubator space and a research hub” to develop IoT tech in healthcare, social care, and Smart Cities: cities that use digital technologies to improve industry performance and general wellbeing.
Film tax relief has been increased to 25%, and the high-end television tax relief has been extended by reducing the minimum UK expenditure requirement. The Skills Investment Fund gets £4 million to foster training and development in film, TV, visual effects, video games and animation. The same amount has also been committed to a new Video Games Prototype Fund to support new and growing gaming companies.
Is your business eligible for R&D tax credits? The government wants to increase accessibility and take-up in this area, especially for small businesses. Expect a “roadmap for further improvements” shortly.
Would your tech business benefit from being surrounded by likeminded companies? “Digital hubs” featured prominently this year: multi-million pound investments have been granted to help fund “tech incubators” in Sheffield, Leeds and Manchester.
Published Sunday January 18, 2015