How the budget shakes up for small businesses

It’s the start of a new tax year. That means another year of people trying to sell me their self-assessment services long after I have already filed mine. What joy.

Last year was a kick in the balls for small business owners. The government introduced a new tax on dividends, which is how small business owners typically pay themselves.

This year it looked like we were going to hit with the double whammy. First, that £5,000 limit was set to be decreased to £2,000, resulting in me paying tax on an additional £3,000 of income.

Second, the flat VAT rate for my industry was set to be increased by 2%. If you are not familiar with flat VAT, it is a scheme that allows small businesses to pay a set rate of VAT and not claim anything back on purchases, meaning you can avoid doing all the complex VAT accounting. It’s terrific.

This year hasn’t been a complete disaster. The VAT increase has happened, but the reduction of the tax threshold will not take place until next year. Add to that that the corporation tax rate had been reduced by 1% and the additional tax being placed on small business owners is irritating, but not crippling.

One thing remains clear, however. This Conservative government is no friend to small businesses. For a second year running, they have increased taxes in favour of cutting those for big businesses.



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This entry was posted on Saturday, April 8th, 2017 at 11:00 am and is filed under Religion & Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.