Business and Corporation Tax
The 2016 Autumn Statement failed to provide us with much to get excited about when it comes to businesses and Corporation Tax. However, it confirmed that the following planned changes will continue to go ahead:
The main rate of Corporation Tax
The Government will continue to press forward with a view to making the UK more competitive and attractive by reducing Corporation Tax rates over the coming years.
The main rate of Corporation Tax is currently 20%; from 1 April 2017 this will reduce to 19% and eventually reduce even further to 17% from 1 April 2020.
Small Business Rate Relief
Announcements have previously been made stating that from April 2017 small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates.
There will also be a tapered rate of relief on properties whose rateable value is between £12,000 and £15,000.
Rural Rate Relief will increase to 100%
Rural Rate Relief will increase from 50% to 100% in April 2017, saving a business up to £2,900 a year. This business rate relief is available to businesses in rural areas with a population under 3,000, where that business is:
- the only village shop or post office with a rateable value of up to £8,500, or
- the only public house or petrol station with a rateable value of up to £12,500
Class 2 National Insurance Contributions (NIC)
As previously mentioned in the 2016 Budget, there are to be significant changes to the way National Insurance is charged.
Currently, self-employed people have to pay Class 2 NICs at the rate of £2.80 per week if they make a profit of £5,965 or over per year. They also pay Class 4 NICs if their profits are over £8,060 per year.
From April 2018, they will only need to pay one type of National Insurance on their profits – Class 4 NICs. This move will not only save £145.60 per year but will also reduce the administrative burden placed on the self-employed.
Paying Class 2 NICs currently enables self-employed people to build up entitlement to the State Pension and other contributory benefits.
After April 2018, Class 4 NICs will also be reformed to ensure that self-employed people can continue to build benefit entitlements.