As you may be aware the autumn statement released by the chancellor has introduced a few changes to the tax regime, but what does it mean for small businesses?

For Small Businesses

Entrepreneurs Relief on Goodwill – This immediate change will affect any higher rate tax payers who are currently Sole-traders and want to incorporate their businesses. The ability to create goodwill charged to director’s loans on incorporation in order to avoid higher rate dividend tax has been abolished. However it is still possible to avoid capital gains tax on incorporation using Incorporation Relief.

Business Rates – Review of business rates and a cap of 2% for inflation related increases.

SME R&D – Tax credits on R&D for small businesses have been increased by 5% to 230%, this means that you can claim 230% of the costs of any qualifying research and development in order to reduce your tax bills.

Young Apprentices – National Insurance exemption extended from the under 21’s to the under 25’s.

Enterprise Finance Guarantee – Additional £500m for scheme which guarantees small business loans.

Funding for Lending – Scheme extension by a year should make it easier for small businesses to obtain funding for investment and growth.

Personal Taxation

Stamp Duty – New SDLT rates should create savings for 98% of buyers with the creation of property value bands, this means that all properties will get a tax free allowance of £125k.

Personal Allowance – £600 increase to £10,600 as of April 2015

Higher Rate Band – To rise to £42,385 as of April 2015

ISA’s – Spouses will be able to inherit their partners ISA’s tax free upon death. ISA tax free savings limit increased to £15,240.

Large Businesses

The chancellor also announced plans to reduce tax avoidance by banks and other large multination organisations. We will see restrictions on the amount of profit that can be shifted between countries in order to reduce UK tax payments and the credit crunch related losses that can be used by banks to reduce their tax bills.

If any of the issues covered in the autumn statement effect your business, we may be able to help so please get in touch.