Chancellor Philip Hammond delivered his 2017 Spring Budget speech yesterday, outlining significant changes to various tax and financial measures.
Here’s an overview of the tax changes and other updates and what that might mean for your business:
Corporation Tax:
Corporation tax rates will reduce from April 2017 to 19% and this is set to reduce further to 17% from April 2020.
Making Tax Digital:
As the government's flagship Making Tax Digital initiative draws closer, there was some update for smaller businesses. Those with a turnover less than the VAT threshold will have until 2019 to prepare for quarterly reporting. Read more about Making Tax Digital.
Business Rates:
Any business coming out of small business rate relief will benefit from a cap which prevents the rates that it pays from going up by more than £50 per month. Pubs, with a rateable value of less than £100,000, will get a £1,000 discount on rates they pay. Local authorities will also get access to a £300m hardship fund for small businesses worst affected by the rates.
National Insurance:
Self-employed individuals will see the main rate of Class 4 national insurance contribution (NICs) increase to 10% in April 2018 and increase again to 11% in April 2019.
Dividends:
Shareholders and directors of small private businesses will see a significant reduction in the tax-free Dividend Allowance, which will fall from £5,000 to £2,000 in April 2018.
Personal Allowance:
Personal Allowance, the amount of income a person can receive before they pay tax, is set to increase to £11,500 from April 2017 and the higher tax rate threshold of 40% will increase to £45,000.
National Living Wage:
There will be a wage boost for workers as the National Living Wage will increase from £7.20 to £7.50, for those aged over 25, in April 2017.