Are we battening down the hatches before the storm? Spring Budget, first post Brexit.

- Thursday, March 09, 2017

 TaxtWell, I have to say, currently small businesses and entrepreneurs seem to be getting a hard time from increased taxes and employment costs and this budget was no exception.With all the Government euphoria that UK has lower employment due to self-employment it also appears that they are now worried that they are not collecting enough taxes as self-employed pay less but also have no job security. One could speculate that the Government is worried that with Brexit there will be a drop in taxes collected and they are ensuring they have the funds to deal with that, which would be prudent. We have noticed since last summer that HMRC are have become stringent getting paid immediately when in the past they would have been more amiable to payment plans for those businesses struggling with cashflow

Budget impact on business

So, what has the budget got in stall for small businesses?

  • Self-employed NI Contributions will increase with class 4 NI increasing to 10% in April 2018 with a further 1% in 2019. You pay class 4 NI on earnings above £8,060
  • Dividend tax-free allowance will go down from £5k to £2k from April 2018. Director shareholders were already hit last year by taking away the dividend tax credit. This means an extra £225 a year for basic tax payers and £975 for higher rate tax payers

Good news is:

  • Corporation tax is unchanged and still due to decrease to 19% from April 2017 and then 17% from 2020
  • Business rate revaluation takes effect in England from April 2017 which will badly impact some businesses so in addition to the £3.6 billion transitional relief which was announced in November 2016, the government will provide £435 million of further support for businesses facing significant increases in bills from the English business rates system.
  • Tax free personal allowance remains £11,500 for basic-rate taxpayers and will continue to increase to £12,500 by 2020. This personal allowance is clawed back for people earning over £100K.
  • Per the 2016 Budget, the higher rate (40%) Income Tax threshold will change to £45,000 in April 2017.
  • No changes to National Insurance paid by the employed and employers or to income tax or VAT

It will be interesting to see what the November budget has install once the UK knows more on what the outcome of Brexit may mean…….

All these new rates have all been updated in the Naylor Accountancy App available for smartphones at the Apple and Android app store.