The Spring Budget has been and gone, and behind newspaper headlines quite a lot of people no doubt wonder how the Budget will affect their business and what changes need to be made for the year ahead. Our team has paid very close attention to the Spring Budget 2017, provided an overview of the changes to come, and showed insight as to what business owners should keep in mind as they go forward.
Points of particular note are:
Tax-Free Dividend Allowance Cut
The Budget in 2015 brought in a £5,000 tax-free dividend allowance, which took effect from the 6th of April, 2016. The Spring Budget a year later in 2017 made an attempt to reduce the estimated loss to the Exchequer of £6 billion as a result of business incorporations.
As such, this tax-free allowance will be cut to £2,000, just two years after its introduction, commencing 6 April 2018. Most affected will be owner managed businesses, where higher rate taxpayers can anticipate an increase in personal tax of £975 per annum.
Ongoing Adjustments to Business Rates
There was a lot of pre-Budget speculation that the Chancellor would try to address some of the problems arising for small businesses, due to business rate rises taking effect from April this year. Three measures were announced in 2017’s Spring Budget, as follows:
- Businesses that lose their entitlement to some or all of their Small Business Rates Relief (which reduces or eliminates their rates) will be given transitional relief which will ensure that their rate increases will be capped at £50 per month.
- Pubs with a rateable value below £100,000 will get a discount of £1,000 on their rates bill for 2017/18.
- Local authorities will be given a fund of £300 million to give discretionary relief for individual hard hit businesses in their locality.
These measures are not particularly far reaching. They are unlikely to silence the voices criticizing the disproportionate impact of the rates rises between both the north and the south of the country and the implications on online versus high street businesses.
VAT Updates
From 1 April 2017, the VAT registration threshold will increase from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000.
Making Tax Digital for Business
Plans to bring businesses into a modern online digital reporting environment have already been well publicized, although the short timeframe for small businesses has been widely criticized. Spring Budget 2017 has announced a deferral of registration for small businesses by one year. The revised timetable is as follows:
- April 2018 for businesses with turnover in excess of the VAT threshold (£85,000 from 1 April 2017) chargeable to income tax and Class 4 national insurance
- April 2019 for businesses that have turnover below the VAT threshold chargeable to income tax and Class 4 national insurance
- April 2019 for VAT reporting if registered and pay VAT
- April 2020 for entities chargeable to corporation tax
Although a deferral for small businesses is welcome, it falls short of a full exemption for micro- businesses. There is an exemption if turnover is less than £10,000 per year, although employed individuals with secondary income of greater than £10,000 per year will be required to register.
The proposals for Making Tax Digital for Business will bring in legislative changes so that businesses will have a prescribed method of keeping records digitally, filing quarterly data and an obligation to finalize the accounts within 10 months of the fourth quarter.
For VAT, the quarterly reporting will effectively replace the traditional VAT return.
Parliament believes this will provide taxpayers with more up to date and relevant information regarding their tax liabilities and reduce errors by 10%.
Stamp Duty Land Tax
After quite a few changes to the SDLT regime, this time the Government has thankfully, only made one slight tweak. Previously, it was announced that the payment date was to be shortened from 30 days to 14 days after the tax point (completion or substantial performance), to take effect from April 2017. This has now been deferred until April 2018.
Whatever 2017 and 2018 will hold for you and your business, Salisburys Chartered Accountants in St Asaph can assist you with making sense of these changes.
Furthermore, we would be delighted to assist you with advice on our range of services and work together with you to formulate ways to continue to thrive – services such as our tax investigations service, statutory compliance, as well as company and personal tax planning.
Whatever changes you need to make to your business – if any at all – you’re not alone, and we’re here to help.
