Spring Budget 2017
The budget had very much the feel of an interim budget, being much reduced in measures and content from budgets we have experienced previously. Philip Hammond perhaps erring on the side of caution ahead of his party triggering article 50 later this month, and is playing it safe in the knowledge that he can make further changes later in the year in the Autumn 2017 Budget.
That being said, there were a number of new measures announced which those in business will need to familiarise themselves with. Some of the highlights are as follows:
- The Government has moved to reduce the perceived tax gap between those in employment, and those who choose to be self-employed or operate via their own limited company. This sees an increase in the NIC rate for the self-employed by 1% (to 10%) from April 2018 and a further 1 % (to 11%) from April 2019.
- For those who choose to operate as a limited company, the dividend allowance is being reduced from £5,000 per annum to £2,000 per annum from April 2018. The dividend allowance was originally introduced in April 2016, following an increase in the taxation rate of dividends by 7.5% across the board, to soften the impact of that increase. With a reduction in the dividend allowance, the previous increase in the rate of taxation of dividends will be more greatly felt.
- There was some good news for smaller business, with a delay being announced on the requirement to have to file digitally quarterly tax information for those below the VAT threshold of £85,000, until April 2019. The Government is however pushing ahead with Making Tax Digital for April 2018 onwards, for the larger sole traders.
- The threshold for unincorporated businesses to elect for the optional cash basis of accounting will be increased from £83,000 to £150,000 of turnover. This increase is helpful for small business, as it offers a more straightforward method of calculating trading profits.
- The taxable turnover registration threshold for VAT will increase from £83,000 to £85,000
If you have any queries on matters announced in the Budget, or wish to understand the impact on you or your business, please contact our Tax Team by email or by ringing 07853222375.