A range of business tax cuts and incentives come into effect this week, in what the Government calls the “biggest cuts to personal and business taxes for two decades and the most important in a generation.”
Dramatic statements aside, here we look at the main business measures which come into play at the start of April – both those which were pre-announced, and new measures announced during the recent Budget.
The main rate of Corporation Tax has been cut further – to 21% from 1st April 2014. It is due to fall further still – to 20% next April, when it will be aligned with the rate most small limited companies pay – the ‘small profits’ rate of 20%.
Since the Coalition came into power in 2010, the main rate of CT has fallen by seven percentage points in all.
Annual Investment Allowance
In a bid to encourage businesses to invest, the amount firms can spend on eligible plant and machinery costs (and offset against tax) has been doubled to £500,000, and extended until the end of 2015.
As a result, almost all businesses will pay no tax at all on eligible business investments (98.2%).
From Sunday 6th April 2014, the new ‘Employment Allowance’ will take effect. The new measure will cut the Employers’ NIC bills for eligible businesses (including the self employed) by up to £2,000 per year.
1.25m businesses are expected to have lower NI bills as a result of this implementation, and over 400,000 firms will have no NICs to pay at all.
Further business measures implemented in April 2014
Alongside the measures mentioned above, other changes taking place this week include:
- The annual increase in business rates has now been capped at 2%.
- Small business rates relief has been extended for a further 12 months.
- Specific rates relief for high street properties – a £1,000 discount on eligible businesses.
- The planned fuel duty hike for September has been scrapped.
- The personal allowance will rise to £10,000 from 6th April 2014, and to £10,500 from 6th April 2015.