The 2015 budget is out and according to the Chancellor of the Exchequer Britain is walking tall again. But how will it affect you and the financial survival of your business?
There may be savings but somewhere along the line we all pay because it’s about boosting the economy not giving us all tax breaks. So you should never stop looking over your shoulder where the tax man is concerned.
As a small business only a certain number of things really affect my ability to make a profit on a day to day basis:
ISA savings allowances – this means nothing to me anymore since the interest rates are so poor. Better off with the Santander 123 account which is 3% pa. I have given up on ISA’s until the savings rate is back above 3% again.
Earnings before tax – The last time I paid tax on income was 2009 before I took the plunge and became a full time student for 3 years. Since then I have been running my own business and I haven’t hit the limit in that time. This is largely thanks to the expenses I can claim back as part of my tax return and mileage allowances which keep me under the bracket to the tune of about £6000pa. Now that the tax limit has been upped again I’ve hit another safe zone so I needn’t worry on that front.
Mileage allowances – currently 45ppm and with the mileage I do, that’s a lot of money – currently about 3000 pa.
Working tax credit allowances – those in work but earning less than the taxable allowance after deductible expenses have been calculated get WTC which is supposed to top up your income to get you into the taxable bracket. Mine never has but it’s a vital source of extra cash each month to keep my head above water. It’s not a lot – amounting to less than 2000 per year but every little helps.
Small business rate relief – this is a saving passed on to me by the owner of the premises where I rent my studio. It means I can afford to rent a studio. Safe for now.
Annual tax returns abolished – is the new system going to be time saving or another long winded headache? Because I manage my paperwork throughout the year my return only took about 4 hours to do last year. Only time will tell but you won’t have to worry about this change for sometime yet.
Class 2 NI for small businesses abolished. Great. But what happens to my state pension? I guess there won’t be one.
Overall there are no nasty surprises but nothing that really makes me breathe a sigh of relief. At the very least, I’ll still be in business. And that has to be a good thing.