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

The Government euphoria that the UK has lower unemployment due to self-employment also appears worried. 

The government is worried because the self-employed pay less and also have no job security which means the government isn't collecting enough taxes. 

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 

The 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.