Small Businesses: Taxation

The Government provides support through the tax system to small businesses in a range of ways.

The Small Profits Rate and taper rate mean almost 70% of actively trading companies are taxed at a rate of 19%, with only 10% of businesses paying the full 25%.

Within National Insurance, the Government has protected the smallest businesses by increasing the Employment Allowance from £5,000 to £10,500, which means that 865,000 employers will pay no employer NICs at all this year.

The Government also increased the Small Employer Compensation rate, which compensates small employers for the additional costs of paying National Insurance when employees receive statutory payments (e.g. Statutory Maternity Pay).

At £90,000, the UK has a higher VAT registration threshold than any EU country and the joint highest in the OECD. This keeps the majority of businesses out of the VAT regime altogether

Small Business Rate Relief (SBRR) is available to businesses with a single property below a set rateable value. Eligible properties under £12,000 will receive 100 per cent relief, which means over a third of businesses in England (more than 700,000) pay no business rates at all. There is also tapered support available to properties valued between £12,000 and £15,000, which an additional c.60,000 businesses benefit from.