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Budget Update 2017
The Chancellor of the Exchequer delivered his budget speech on Wednesday and we have put together a summary of the main changes which could affect you and your business. We hope you find it helpful.
The majority of his speech confirmed previously announced measures, however, increases in Class 4 NICs for the self-employed from April 2018, and a reduction in the dividend allowance to £2,000 per annum from the same date are two of the biggest changes likely to affect business owners.
Changes for Businesses
CLASS 4 NICs INCREASED TO 10% FROM APRIL 2018 & TO 11% FROM APRIL 2019
While the abolition of Class 2 NICs (Self Employed NI), will go ahead from April 2018 as planned, it was announced that Class 4 NIC on self-employed profits will increase from the current rate of 9% to 10% from April 2018, and then again to 11% from April 2019. However, the higher rate will remain at 2%. As a result, anyone with profits over £16,250 per annum will pay more NIC from April 2018.
SUPPORT FOR BUSINESSES OUTGROWING SMALL BUSINESS RATES RELIEF
Alongside the previously announced changes to extend the number of businesses able to qualify for small business rates relief which arrive next month, Philip Hammond also announced that there will be support for growing businesses coming out of small business rates relief, with a cap placed on the rates increases faced by those businesses of £50 per month.
DIGITAL TAX DELAYED FOR UNINCORPORATED BUSINESSES UNDER VAT THRESHOLD
The government will allow an extra year for small businesses to prepare for Making Tax Digital, delaying the start date until April 2019 for eligible businesses. This will give those businesses a little longer before they have to make quarterly tax updates and implement digital record keeping.
VAT REGISTRATION THRESHOLD INCREASED TO £85,000 FROM APRIL 2017
From April 2017 the VAT registration threshold will be increased to £85,000 (currently £83,000), while the VAT de-registration threshold will also increase to £83,000 (currently £81,000).
DIVIDEND ALLOWANCE CUT TO £2,000 PER ANNUM FROM APRIL 2018
In a measure designed to reduce the tax gap between those employed and those running their own companies the Chancellor announced that the current £5,000 annual dividend allowance will be cut to £2,000 from April 2018. The current allowance will remain available for the 2017/18 tax year, but from April 2018 this change will cost most company shareholders an extra £225 in tax per annum
£1,000 BUSINESS RATES DISCOUNT FOR PUBS FROM APRIL 2017
The government will introduce a £1,000 business rates discount for public houses with a rateable value of up to £100,000, for one year from April 2017. This is expected to benefit 90% of UK pubs.
Changes for Individuals
FREE CHILDCARE FOR 3 AND 4 YEAR OLDS DOUBLED TO 30 HOURS A WEEK
The Chancellor confirmed previous announcements that the current 15 hours a week of free childcare for 3 and 4 years olds will be doubled to 30 hours a week from September 2017.
PERSONAL ALLOWANCE & HIGHER RATE THRESHOLDS TO RISE FROM APRIL 2017
As previously announced, the personal allowance will be increased to £11,500 from April 2017 (currently £11,000). Higher rate taxpayers will also benefit, with a welcome increase in the higher rate threshold to £45,000 from April 2017 (currently £43,000), while eventual targets of a personal allowance of £12,500 and a higher rate tax threshold of £50,000 by 2020 were also confirmed.
NS&I INVESTMENT BOND INTEREST RATE TO BE 2.2% ON UP TO £3,000
The Chancellor confirmed that the new National Savings & Investments Investment Bond will be introduced from April 2017 and will be available for a period of 12 months. It will offer investors a market-leading interest rate of 2.2% on savings of up to £3,000, over a 3 year term.
If you would like to arrange a time to discuss how you or your business might be affected by these or any other changes, then please do not hesitate to call or email us to arrange a time to discuss.
