Businesses can be optimistic for 2016, says King’s Lynn-based chartered certified accountants

Logo for Hayhow and Co ANL-150625-162343001
Logo for Hayhow and Co ANL-150625-162343001
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Another year has passed so quickly, but for business owners up and down the country they can look ahead to a new one with optimism.

This seems the perfect time to ensure that you are abreast of some of the key changes due in 2016.

By the time of going to press the Annual Investment Allowance, which has become a welcome fixture since its introduction in 2008, will have fallen from £500,000 to £200,000. Although dramatic on the face of it, for many SMEs the new limit is still ample to allow them to claim 100 per cent tax allowances on their entire annual spend on new assets.

The National Living Wage (NLW), with a rate beginning at £7.20 an hour for employees aged 25 and over, is set to come into force on April 1. Employers need to be aware of its approach with current National Minimum Wage standing at £6.70 per hour for workers aged 21 and above.

Some help is on its way to ease the cost of the NLW though. For a third year, the Government keeps faith with its Employment Allowance scheme, where small firms meeting the criteria have previously been able to save the first £2,000 of employer National Insurance, but 2016 sees a 50 per cent increase in its value now set at £3,000.

Important changes are afoot in the private rental sector with a three per cent Stamp Duty Land Tax surcharge to be levied on the purchase of additional residential properties, such as buy-to-lets.

Landlords should also be aware of the replacement of the Wear and Tear Allowance with a new relief that permits the deduction of costs of replacing furnishings, while rent-a-room relief increases by over 75 per cent from £4,250 to £7,500.

Basic income tax personal allowance, which sets the level of income at which you begin to pay tax, in the 2016/17 tax year will be set at £11,000, while the basic rate limit will return to £32,000, which was last seen for 2013/14.