It’s that time of the year when we look at the Budget announced by Government and explain how it may affect you if you’re self-employed – whether you are a contractor, Sole Trader or limited company director in any sector. Thanks to all of you who re-tweeted and commented on our live feed of budget updates for the self-employed.
Personal Tax Allowance
First things first; the big one we were looking out for this year, which affects everyone in the UK, was the personal allowance before tax. You may already be aware that there is an allowance of income you can receive before you have to pay tax. This is due to increase significantly: in April 2012 to £8,105 before any tax is to be paid, and in April 2013 the tax free earning will increase to £9,025. This works out as £175 tax free per week, or £752 monthly, tax free! This is the highest it has ever been in the UK. Good times. It’s also worth noting that the top line of income tax has been reduced to 45% from 50% for incomes of £150,000 and upwards.
Corporation Tax Changes
If you are the director of a Limited Company, with a turnover of 1.5 million plus this will affect you. From April 2012, the Corporation Tax amount to be charged on your company’s profit will be reduced to 24% – and will be down to 22% by 2014 should all go to plan. Corporation Tax for small businesses remains at 20%.
Capital Gains Tax
Capital Gains Tax is a tax on the profit you make when you sell or get rid of something of value in your life, be it property or shares. This also has a tax free allowance of £10,600 currently and is not set to change from April 2012. There may be a change in April 2013, but we will have to stay tuned to find out what.
The North East Oil and Gas Industry
The new tax allowances in the budget include a £3 billion new-field allowance for large and deep fields to open in West Shetland. The Government also plans to enter agreements on tax relief for North Sea decommissioning costs. This could encourage significant investment…
Drive a lot for your Business?
This is where you could be hit hardest. People have even commented in the press that they may change jobs so that they commute less because of the high rise in fuel prices. The general consensus from our self-employed tweeters is that this will hit them hard. A duty increase will add 3.2 pence to each litre of fuel from the 1st of August 2012. This will hurt.
Some exciting developments for new businesses we thought…
- The government is said to be exploring the idea of enterprise loans to help the young start businesses
- They hope to develop much simpler forms for smaller businesses to use to report their income and profit to HMRC (the tax man) in 2012 and therefore ensure that small businesses do not have the same rigmarole to follow as larger corporations.
- They hope to cut tax for patenting for medical developments – great for small medical businesses
- National Loans Guarantee Scheme – with the aim of making it cheaper for small businesses to borrow from banks
- Here’s one for our London contingency – Mayor of London to be given a £70 million development fund to attract new business to the capital.
- Video Game and animation industries to get support – keeping the likes of Wallace and Gromit in the UK – this was met by wild (and I mean wild) approval from the House of Commons – Politicians are apparently massive Wallace and Gromit fans!
- Businesses exporting from the UK will also be more strongly supported
So what’s the verdict? Let us know how it’s going to affect you. If you’re self-employed and are looking for more information, please don’t hesitate to get in touch.
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