As I’m sure you’re aware the Spring Budget was announced on 8th March 2017. With lots of information published, here we’ve selected the important tax changes that could affect you:
Firstly, some good news! The personal tax free allowance is increasing by £500 from £11,000 in 2016/17 to £11,500 in 2017/18.
The basic rate band will also increase by £1,500 from £32,000 in 2016/17 to £33,500 in 2017/18.
This means individuals will be able to earn up to £43,000 before paying the higher rate tax.
However, the dividend allowance is decreasing by £3,000 from £5,000 to £2,000 from April 2018. This will cost the average £43k earner an extra £225.
Class 4 National Insurance is also increasing from 9% to 10% in April 2018, and then again to 11% in April 2019. Class 2 National Insurance will, however, be abolished from April 2017.
*Update* The government announces U-Turn! Class 4 NIC will not increase in future and will remain at 9%. Self-employed individuals should instead be financially better off going forwards.
Corporation tax is being reduced from 20% to 19% from April 2017.
Making Tax Digital:
April 2018: if your profits are chargeable to income tax, you pay Class 4 National insurance and have a turnover of above the VAT threshold your tax will go digital in April 2018.
April 2019: if your profits are chargeable to income tax, you pay Class 4 National insurance and have a turnover of below the VAT threshold OR you are registered for and pay VAT, your tax will go digital in April 2019.
April 2020: if you pay corporation tax or have a partnership with a turnover of more than £10 million, your tax will go digital in 2020.
The VAT registration threshold will increase by £2,000 from £83,000 to £85,000. Thus, de-registration will also increase to £83,000.
What this means for me
Each business will be affected differently dependent on several factors, including, turnover. If you have any queries regarding any of the changes, or would simply like to know more about how these changes will affect your business personally then please don’t hesitate to contact us.
If you’re already a Franks Accountants client, be assured that we are already working on how to mitigate the damages that your business may face.
For those who are not clients of Franks Accountants, please feel free to book a free initial consultation with us so that we can chat about how these changes may affect your business and how we can reduce the damages.