[03.03.17]

Spring budget 2017

We have put together the key points for businesses from the Chancellor’s Spring budget:

• Implementation of Making Tax Digital – the implementation of Making Tax Digital will be delayed for one year, for sole traders, landlords and the self-employed operating under the new £85,000 VAT threshold. The changes will ease the financial burden on small businesses to invest in accounting software and training for Making Tax Digital rollout beginning April 2018.
• Class 4 National Insurance contributions – to increase from the current rate of 9% to 10% in April 2018 and 11& in April 2019.
• Tax-free personal allowance – from 6^th April 2017 the tax-free personal allowance will increase to £11,500. The higher rate threshold will rise to £45,000 except in Scotland where it remains at £43,000.
• Corporation tax – it was confirmed that the rate of corporation tax will reduce to 19% from April 2017. As previously announced, the corporation tax rate will reduce by a further 2% to 17% by 2020.
• Tax-free dividend allowance – a reduction in the tax-free dividend allowance for shareholders from £5,000 to £2,000 from April 2018.
• Capital gains tax – the annual capital gains tax exemption increases by £200 to £11,300.
• VAT – the taxable turnover threshold, which requires a person to register for VAT, increases from £83,000 to £85,000 per annum. The threshold below which a VAT-registered person may apply to deregister increases from £81,000 to £83,000 per annum, and the relevant registration and deregistration threshold for Intra-Community acquisitions will also be increased from £83,000 to £85,000 per annum. All these changes will take effect from 1^st April 2017 and will prevent around 4,000 businesses from having to register in the financial year 2017 to 2018.
• Flat rate VAT scheme – with effect from 1 April 2017, businesses eligible to use the flat rate VAT scheme but which are classified as ‘limited cost’ businesses, will have to account for VAT at 16.5% of their relevant gross turnover.
• Business rates – the adverse effect of the changes to the rates revaluation in England in April 2017 on some businesses may be reduced in certain circumstances. The measures include:
  • support for small businesses losing small business rate relief to limit increases in their bills to the greater of £600 or the real term transitional relief cap for small businesses each year
  • providing English local authorities with funding to support discretionary relief, to allow them to provide support to individual hardship cases in their local areas
  • a £1,000 business rate discount for pubs with a rateable value of up to £100,000, subject to state aid limits for businesses with multiple properties, for one year from 1 April 2017.
• Vehicle excise duty – rates for hauliers and HGV Road User Levy frozen for another year.
• Cash basis entry – from 6^th April 2017, the cash basis entry threshold is to increase from £83,000 to £150,000. Cash basis accounting is an optional and simplified method for calculating and reporting taxable profits for qualifying trading businesses.
• Tax avoidance clampdowns:
  • On businesses converting capital losses to trading losses
  • On the abuse of foreign pension schemes
  • Introducing VAT on roaming telecoms services outside the EU.

If you would like to discuss how any of these changes will affect you and your business please get in touch.

Castletons Accountants