PLANS to reform the UK's burnt out tax system were revealed by the Chancellor in a move aimed at "lighting the fires of enterprise".
Stating that the UK's tax system "can do more", George Osborne used his 2016 Budget to outline a number of measures aimed at supporting business.
Business leaders in York and North Yorkshire have welcomed new measures announced yesterday, including business rate relief for small firms rising from £6,000 to £15,000 tax free, which will see 600,000 exempt from paying rates.
In a bid to support self employed workers, Class 2 National Insurance is to be abolished in a move that will give a tax cut of more than £130 to three million people from 2018 according to the Chancellor.
In what he described as "Britain blazing a trail for the rest of the world to catch up", Mr Osborne cut corporation tax from 20 per cent to 17 per cent by April 2020.
The Budget announcement on business rates will be a big relief for small businesses according to a local accountant Keith Emmerson who owns TaxAssist Accountants in York. He said: "More than doubling the threshold for claiming small business rate relief will mean that many local business owners will no longer pay any business rates for their office or shop premises.
"This will be a major boost for many small businesses and will go some way to help level the playing field when competing against online only product and service suppliers.
"Cuts to Capital Gains Tax, changes to commercial stamp duty and plans to reduce Corporation Tax are also welcome.
"At last we have a Budget which has some measures to back small business and support the enterprise and hard work of this vital sector.
"They are facing new responsibilities and pressures, including workplace pensions schemes, the national living wage, dividends taxation changes and quarterly tax reporting."
Ed Everard, president of the York and North Yorkshire Chamber of Commerce, said: "Against a backdrop of slowing global trade and UK growth downgraded to two per cent for 2016, George Osborne had few levers to pull, however in keeping with the Chamber’s requests for commitment to no new taxes on businesses and entrepreneurs he delivered and in some cases exceeded.
"We welcome the Chancellor’s actions to reduce business rates for smaller businesses. The Chamber did call for this innocuous tax to be reviewed and we are pleased that he has taken real action to lessen the crushing burden of business rates which are applied before companies even make a profit.
Jonathan Oxley, chair of the Institute of Directors in Yorkshire and the Humber, said: "The thousands of small businesses in region will welcome the measures designed to help lighten the burden of tax and regulation."
On reforms to business rates, Dave Innes, policy and research manager for economics at the Joseph Rowntree Foundation, said: "While this may provide a boost for small businesses, it could hit local councils’ budgets as business rates are being fully devolved to them in 2020.
"The government has announced some protection for councils in the short run, but if this isn’t extended to after business rates have been devolved, councils stand to lose £1.4 billion per year, or 3.5 per cent of their total revenues.
"The government should consider providing extra support for councils facing the biggest challenges to grow their local economy, which are often the most deprived areas which have been hit hardest by local authority cuts in the last five years."