NI and tax breaks for businesses

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The Autumn Statement included one or two surprises for businesses, plus a possible time bomb for homeowners.

What’s the full story on these?

Employers’ NI savings: The good news is that the Chancellor announced a last-minute NI break for employers. Where you employ young workers, i.e. those aged 20 or less, after 5 April 2015 they will be exempt from NI.

What’s it worth? If, for example, you pay an under 21 year old an annual salary of £12,000, the NI saving for your company will be around £550, while the employee will be better off by £480. Tip. When taking on an under 21 year old employee after 5 April 2015 you might be able to pay them a little less to take account of the fact that they won’t have to pay NI.

Business rates: There will be a 2% cap on business rate increases, and pubs, restaurants and small shops will receive a £1,000 discount on their rates for the next two years. Plus, businesses that move into vacant high street shops will receive a 50% discount on their rates for 18 months. Lastly, small business rate relief is extended until 2015.

Homeowners: The Chancellor’s shock announcement was the reduction to the capital gains tax (CGT) relief on homes. Currently, even where you aren’t living in a property as your main home, but have in the past, the capital gain for the final 36 months you own it is tax free. This CGT-exempt period is to be cut to 18 months.

When will it apply? The shorter CGT-exempt period will apply to gains where you sell a property on or after 5 April. Therefore, if you’re considering selling a property and will be affected by the change, aim to exchange contracts by no later than 5 April. Under the proposals you’ll then have up to 5 April 2015 to complete the sale without the shortened exemption period applying.