by constructaquote - 8 March 2017
On March 8th, Chancellor Philip Hammond delivered the highly anticipated post Brexit spring budget. Business rate increases, changes to tax payments and new tax avoidance rules are some of the changes that will effect small business owners.
Here’s a summary of the key points you need to know…
Growth
Borrowing
Self-Employed
Self-employed Britons face an increase in their national insurance contributions as the Chancellor attempts to relieve the “unfair burden on people in employment.”
The current 9pc levy on profits will increase to 10pc in 2018 and 11pc in 2019 resulting in an extra £2bn tax revenue for the current parliament.
With more and more Britons opting to be self-employed due to lower rates of tax relative to employment, Hammond stated he would address the multi-billion-pound shortfall by increasing the tax for self-employed.
Limited Company Directors
Small business owners who are running their business as a limited company will also have to pay more tax.
Hammond announced he will reduce the dividend allowance from £5,000 to £2,000 from 2018, meaning a tax increase of £600 a year for the vast majority of small business owners running a limited company, accumulating a further £2.6bn for the government.
This will, however, only affect those with more than £50,000 in stocks and shares outside ISA’s and owners of limited companies will benefit from the previously announced cut in corporation tax from 20% to 19% being introduced in April 2017.
Business Rates
Mr Hammond faced further backlash over businesses facing rates rises as a result of the revaluation of premises, due to come into action from April 1st 2017.
He announced that there would also be a “discretionary fund” for councils to allocate to those businesses hit the hardest, as well as a £50-per-month cap on increases for firms facing the loss of small business relief.
Hammond also stated that said 90% of pubs would be given a £1,000 business rates discount, however, for most pubs it simply isn’t enough.
The changes to business rates amounts to a £435m cut.
Tax Avoidance
New legislation will prevent the circumvention of the Promoters of Tax Avoidance Schemes (POTAS) regime. Advisers who help clients evade tax face fines of up to 100% of the total tax bill they assisted as part of the new rules that came into force from 1 January this year.
The government will also no longer accept the excuse of those that claim they had relied on non-independent advice as taking ‘reasonable care’ when considering penalties for a person or business that uses such arrangement.
by Charlotte Houghton - 7 October 2020
by constructaquote - 6 October 2020
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