How Does The 2015 Budget Affect Your Business?

Although it’s too early to judge the full impact of the July 2015 budget on your business, now is the time to start thinking about your long-term goals in a new light. Careful financial planning can do a lot more for your quality of life than simply putting money in the bank.

By focusing on specific business and lifestyle goals and by reviewing your plans on a regular basis, you can change the way you work and lead a more secure and fulfilling life. Here are the key points from the budget to bear in mind when considering the best way forward.

Corporation Tax Goes Down

From 2017, Corporation Tax goes down to 19%, followed by 18% in 2020. For larger firms this could result in substantial savings, although for start-ups and small companies the gain is likely to be minimal.

However a 50% increase to the National Insurance employment allowance will give smaller companies an additional boost by reducing their NI contributions.

The National Living Wage Goes Up

April 2016 sees the hourly minimum wage rise from £7.20 to £9.00. Firms reliant on large numbers of staff at the lowest rate of pay will clearly feel this the most. It also raises the worrying possibility that employers may feel the need to reduce staffing levels rather than deal with the financial impact of absorbing the higher rate.

Consequently the gains from the National Insurance changes could be wiped out, but this remains to be seen.

Improving Access to Finance

A number of measures are being introduced to help small businesses overcome financial obstacles. Obtaining funding to cover short-term cash flow has been a major challenge.

Now UK banks will be obliged by law to make loan approval easier. They’ll be required to share credit details with other lenders, particularly when loans have been refused.

This will enable funding institutions such as online platforms to tailor-make an alternative solution. In addition the British Business Bank is planning to increase finance to small and medium businesses up to £10bn by 2019.

New Enterprise Zones

The Government is encouraging cities to form business zones. Firms in these areas will benefit from a reduction in taxes and receive business support.

The most notable zone currently is the Sheffield, Leeds, Manchester and Liverpool group in the north. This initiative is now being extended to smaller towns throughout the country.

Changes to Small Business Investment

Small to medium-sized companies can use the Annual Investment Allowance to increase productivity. Purchases of plant and equipment up to a value of £500,000 enjoy a number of tax deductions.

However despite calls for this to be raised, it’s actually being decreased to £200,000. Some CEOs have praised this as a more sustainable long-term strategy whilst others feel it’s a disappointing backward step.

Extended Sunday Trading

This is sure to be contentious especially as control for Sunday trading is being given to local councils so the impact may vary in each area.

Large organisations are at the forefront of the campaign to stay open for longer, which is hardly surprising as they currently attract the bulk of the weekend trade.

Small firms could struggle to compete under these circumstances and the impact on the local community feel of the high street could be grave indeed.

Critics suggest that measures such as improved parking facilities and an easing of licensing laws would have a far more positive effect on trade for businesses of all sizes.

The Office for Tax Simplification

This advisory body is under the jurisdiction of the Treasury and provides impartial guidance on reducing the frustrating complexities of the tax system. So far the results have been limited.

The 2015 budget finally gives the OTS substantial powers to make real progress. Tax returns can already be done online and further reforms in tax reporting are set to come into effect in the near future. The OTS will introduce the next phase of reforms in the 2016 Finance Bill.

No budget will ever be perfect, but that’s the inevitable result of trying to balance the books in an imperfect world. A carefully thought-out strategy will allow you to negotiate the economic peaks and troughs and achieve a secure and satisfying work/life balance.

Economic uncertainty can’t be eliminated but it can definitely be anticipated. Careful planning with people who understand your aspirations will help you ride out the downturns and make the best of the good times.

At Expert Wealth Management, our expert team can help you financial security in the long term, get in touch today by calling 01993 772467 or contact us online.