Following the Chancellor’s Budget speech, Matthew Gard, managing director of North Devon accountants Davisons provides a summary of key changes:
“The Budget 2017 brought with it very few real changes in respect of the tax system. However, there was bad news for the self employed with Class 4 National Insurance contributions increasing from the current 9% to 10% with effect from April 2018, and to 11% from April 2018.
“There were also changes for those who receive dividend income with the tax free allowance reducing from the current £5,000 per year to £2,000 per year with effect from April 2018.
“The introduction of Making Tax Digital has been delayed for unincorporated businesses and landlords with a turnover of less than the VAT threshold (£85,000 from April 2017) by 1 year to April 2019. In addition, the turnover threshold for those that can report their income and expenses on a cash basis has increased from the VAT threshold to £150,000 from April 2017.”
Below are some of the key tax measures highlighted by Davisons:
- The basic personal allowance increases from £11,000 in 2016/17 to £11,500 in 2017/18. The basic rate band for 2017/18 will increase to £33,500 from £32,000 in 2016/17.
- The tax free allowance for dividend income will reduce from the current £5,000 to £2,000 from April 2018. As previously announced, class 2 National Insurance contributions will be abolished with effect from April 2018. Class 4 Contributions will be increased from the current 9% to 10% with effect from April 2018, and to 11% with effect from April 2019.
- The National Insurance thresholds for employers and employees contributions will be made consistent at £157 per week as previously announced As previously announced, from April 2017 there will be two new £1,000 allowances for property and trading income. Those with income below the level of the allowance will no longer have to declare or pay tax on that income. Those with income in excess of this figure can deduct the allowance rather than deducting their exact expenses.
- From April 2018, employer National Insurance Contributions will be due on termination payments in excess of £30,000 that are already subject to income tax.
- VAT registration limit increases from £83,000 to £85,000 from 1 April 2017.
- VAT deregistration limit increases from £81,000 to £83,000 from 1 April 2017.
- Those using the flat rate scheme who spend a total of 2% or less of their turnover, or less than £1,000 per year on goods will have to use the limited cost basis when completing VAT returns from April 2017. This means that they will have to use a fixed rate of 16.5% rather than the percentage applicable to their business sector.
- As previously announced the main rate of corporation tax will reduce to 19% from April 2017 and to 17% from April 2020
- From April 2018 the threshold for allowances available on the purchase of motor cars will reduce from 130g/km to 110g/km for the 18% rate to apply and from 75g/km to 50g/km for the 100% rate to apply.
For full details visit davisons-uk.com.