£7bn Tax Cut For 'Nation Of Shopkeepers'

George Osborne sought to woo small business as he set out plans for a £7bn tax cut for "our nation of shopkeepers".

The changes will mean 600,000 small firms pay no business rates at all from next April, saving them nearly £6,000 a year.

A further quarter of a million will see a reduction in the amount they contribute.

The measures were welcomed by business groups.

Mr Osborne also announced help for people selling goods online or renting out their homes through the internet, as well plans to cut corporation tax and reform commercial stamp duty.

The main business rates changes will extend tax relief for this charge to firms with a rateable value of less than £15,000 – more than double the current level of £6,000.

The threshold for the higher rate of tax will be increased from £18,000 to £51,000.

Mr Osborne told MPs that a typical corner shop in Barnstaple, hairdressers in Leeds and newsagents in Nuneaton will pay no business rates.

Meanwhile corporation tax on company profits is to fall to 17% from April 2020.

Elsewhere, commercial property stamp duty is to be reformed along the lines of the previous shake-up of residential property stamp duty.

This will bring in an extra £500m a year though 90% will see their tax bills cut or stay the same.

These changes reform the previous "slab" system which had mean that going just £1 over a tax threshold for a property could mean the stamp duty paid on the purchase tripling.

New banded tax rates will mean, for example, buying a pub in the Midlands for £270,000 will cost £3,000 in stamp duty, down from £8,000.

The new tax regime comes into effect from midnight while there are transitional rules for those who have exchanged, but not completed contracts before midnight.

In another measure, the Chancellor said he wanted to tackle the "unfairness" caused by a rise in overseas suppliers storing goods in Britain and selling them online without paying VAT, undercutting British firms.

Two new tax-free allowances, each worth £1,000 a year, will be introduced, aimed at micro-entrepreneurs who sell services online or rent out their homes through sites such as Airbnb.

Mr Osborne said it was a "tax break for the digital age" and half a million people would benefit.

Another measure will see a band of national insurance affecting three million self-employed people is to be abolished from 2018 resulting in a tax cut of more than £130.

Mike Cherry, policy director at the Federation of Small Businesses, said: "The Chancellor has listened to our calls for the tax system to be made simpler for small businesses and the self-employed and taken important action on business rates."