John Baron MP: Businesses across Basildon and Billericay receive boost as tax changes kick in

MP welcomes tax cuts to help employment

John Baron MP, has welcomed the start of tax reforms that will help businesses across Basildon and Billericay to invest more of their money into growing and taking on more staff.

From 6 April 2016, employer National Insurance contributions for apprentices under 25 are completely abolished, saving a business employing an apprentice on the National Minimum Wage over £500 a year.

The employment allowance for all businesses and charities is also rising from £2,000 to £3,000 so that a firm can employ up to four people full time on the new National Living Wage and pay no employer National Insurance contributions at all.

Businesses will also benefit today from a cut in Capital Gains Tax – with the higher rate falling from 28 per cent to 20 per cent and the basic rate from 18 per cent to 10 per cent – ensuring they can access the capital they need to grow and create jobs.

Farmers across Basildon and Billericay will also for the first time be able to average out the tax they pay on their profits from two to five years, helping them better manage potential fluctuations in income caused by a range of factors from global markets to weather. It is estimated this could benefit over 29,000 farmers nationally who could gain around £950 per year.

Last Friday, 1 April 2016, saw a range of other reforms begin, including the further extension of the doubling of small business rates relief into 2016/17 and the freezing of fuel duty – which will see small businesses with a van save £12 each time they fill their tank compared to the fuel escalator plans left behind by Labour.

John said:

“Government should and is lowering tax to help businesses thereby making it easier for them to grow, create jobs and help train young people. This will help many people across Basildon and Billericay.”

Notes to Editors

• Employer National Insurance contributions abolished for apprentices under 25. As announced in the 2014 Autumn Statement, employer National Insurance Contributions for apprentices under the age of 25 are completely abolished from 6 April 2016. An employer employing an apprentice 21 to 24 years of age 35 hours a week on the National Minimum Wage of £6.70 would have been liable to National Insurance contributions of 13.8 per cent on earnings over £155 per week – that’s £570 per year (HMT, Autumn Statement 2014, 3 December 2014, link; National Minimum Wage and National Living Wage rates, accessed 5 April 2016, link; HMRC, Rates and Allowances: National Insurance contributions, 6 April 2015, link).

• Employment allowance rises to £3,000. As announced in the 2015 Summer Budget, from 6 April 2016, the National Insurance contributions Employment Allowance rises from £2,000 to £3,000. This will allow a firm to employ four full time workers on the National Living Wage of £7.20 an hour – which came into force on 1 April 2016 – and pay no employer National Insurance at all. (HMT, Summer Budget 2015, 8 July 2015, link).

• Capital Gains Tax. As announced at this year’s Budget, from 6 April 2016, the higher rate of Capital Gains Tax (CGT) falls from 28 per cent to 20 per cent, and the basic rate from 18 per cent to 10 per cent. The changes will not apply to carried interest and for gains on residential property. This will ensure that CGT provides an incentive to invest in companies over property. Private Residence Relief will continue to ensure that an individual’s main home is not subject to CGT (HMT, Budget 2016, 16 March 2016, link).

• Doubling of business rates relief extended. As announced at the Spending Review and Autumn Statement 2015, small business rates relief will be extended again through to April 2017. In the recent Budget it was further announced that small business rate relief would be permanently doubled from April 2017 (HMT, Spending Review and Autumn Statement 2015, 25 November 2015, link; HMT, Budget 2016, 16 March 2016, link).

• Fuel duty frozen for the sixth year in a row. It was announced in the recent 2016 Budget that fuel duty would be frozen again for the sixth year in a row, meaning the average small business with a van saves £12 each time they fill their tank compared to the fuel escalator plans in place before 2010 (HMT, Budget 2016, 16 March 2016, link).

• Extending averaging for farmers. As announced at the 2015 Spending Review and Autumn Statement, from 6 April 2016, farmers will have the choice of averaging their profits for income tax purposes over two years or five years. More than 29,000 farmers are expected to benefit by around £950 per year (HMT, Spending Review and Autumn Statement 2015, 25 November 2015, link; DEFRA press release, 24 March 2015, link).