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Autumn budget 2021 key points for business

11/5/2021

We love a list that gets right to the point. So here is our key points for businesses in the UK from the Chancellor's autumn budget 2021:

1) Dividends: rise of 1.25% tax after nil band from 7.5% to 8.75% and higher rate band up from 32.5% to 33.75% from April 2022

2) Capital gains tax (CGT): with immediate deadline to report & pay after selling a UK residential property has increased from 30days to 60days after completion date. Giving landlords more time

3) Corporation tax: will rise from 19 % to 25 % from April 23. Businesses with profits less than £50k will get a small profit rate which is still 19%. For profits above £50,000 there is a tapered rate with bands & %’s going up to the 25% rate.

4) National insurance: Increase 1.25% national insurance contribution for all (employees, employers & self-employed) from April 2022.

5) National living wage: increase from £8.91 to £9.50 p/hr.

6) R&D tax relief: to be expanded to cover cloud computing & data costs now also as well.

7) Business rates : Rates revaluation cycle changed from 5 years to 3 years from 2023. New Improvement Relief, for businesses to improve/extend property, meaning they won’t pay additional business rates in 12 months after improvements. Plus a 50% business rates discount from April 2022 (to max £110k) for 1 year for retail, hospitality & leisure.

8) Annual investment allowance (AIA): £1m Annual Investment Allowance (AIA) extended to March 2023.

If your business is effected by these changes and you want help and support contact us today

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts Business, Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for both individuals and small & medium sized businesses (SME's). Helping and supporting both individuals and limited company owners / self employed people throughout the UK and the world, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

UK Spring Budget 2021 key points for business

3/5/2021

Tax Affinity Accountants

UK Spring Budget 2021 key points for business owners & SME's

At Tax Affinity we believe in improving the financial lives of every person in the world. Each time the UK treasury government makes budget announcements we spend time reading through the information to help our clients support our clients with the best information to drive their businesses forward even during a down turn.

The key points are listed below for a quick guide:

Furlough (CJRS) extended to end of Sept 2021. Originally it was going to end in April 2021. But the 80% value up to £2500 maximum will only last for 2 months and then taper off in July to Sept dropping to 60% up to a £1875 maximum. The employee is still expected to receive the full 80% up to £2500 at the employer’s expense plus NI and tax etc. Therefore each employer will need to calculate how this effect’s their expenses and weigh up the benefits of keeping staff or not. The cut off date for eligibility was 2nd March 2021 a day before the budget was announced. If you are client or would like to be a client contact Tax Affinity to discuss your PAYE options and PAYE expenses.
Self Employed (SEISS) 4th & 5th grants announced running to end of Sept 2021. 4th grant (April to June) will be the same criteria as the previous ones (up to max £7500 of 80% of profits). While the 5th grant (July to Sept) will be banded with those who have seen a greater than 30% reduction in income eligible for 80% and those who have seen income fall less than 30% receiving a grant of only 30% (up to max £2,850). The cut off date for eligibility was 2nd March 2021 a day before the budget was announced. And both will take into account 2019/20 tax returns filed. Still need to qualify with over 50% of your income coming from self employment.
Business rates 100% relief will be extended to 30th June. Then the following 9 months a 66% discount up to a maximum of £2m.
VAT reduction to 5% extended for some sectors to 30th Sept. Then rate will rise to 12.5% for 6 months to 31 March 2022. After that it will return to normal 20%. If you are a client contact us for more information if this applies to you.
Stamp Duty extension of £500,000 nil-rate to 30 June. After this it will return to £125,000 as before. This is accompanied with the 5% small deposit scheme up to a limit of £600,000 which is not restricted to 1st time buyers or new build homes.
Restart Grant of £6,000 for non-essential retail to £18,000 for hospitality, leisure and personal care shops to replace the current monthly grant scheme.
Universal credit £20 increase will be extended to end of Sept 2021 with a separate one-off payment for working tax credits claimants.
Pension lifetime allowance frozen at £1,073,100 until April 2026. State pension will rise by 2.5% next year.
Corporation tax for UK limited companies with profit less than £50,000 will remain in 19% tax band for year beginning 1 April 2022. Profits above £250,000 will attract 25% corporation tax. With bands in between unspecified at this time.
Super deduction of 130% on plant, machinery and main rate assets from 1st April 2021 to 31 March 2023. This will apply to contracts started on or after 3st Mar 2021 and available for expenditure from 1st Apr 2021 to 31st Mar 2023. Plus losses created can be carried forward.
Carry back losses from 1 to 3 years extended up to max £2million of unused loses in 20/21 and 21/22 tax years.
R&D cap at £20,000 from 1st Apr 21 plus 3 x company’s total PAYE and NIC dues.
Personal Income tax rate will rise from £12,500 to £12,570 and the 40% tax threshold from £50,000 to £50,270 (ie £37,700 at basic 20% rate). CGT allowance remains at £12,300.
Apprenticeship hiring payment rise to £3000 to Sept 2021. Plus fast track visa for hiring overseas staff for tech firms. Meaning a removal of 3rd party endorsement
Recovery Loan Scheme to replace BBL / CBILS etc. Which is a shift from 100% government guarantee to 80% on eligible loans between £25k to £10m for “any legitimate business purpose, including growth and investment”. This is open til 31st Dec 2021.
Annual Investment Allowance of up to £1m is extended to 31st Dec 21.
Road Tax will rise from 1st April 21
VAT deferral scheme extended, vat registered business now have the option to have 11 months interest free instalments between 2021 to 2022 on vat payments. If you don’t take this option you must pay deferred vat by 31st March 2021 for all past vat due. You can opt in between Feb and June 2021 but with fewer instalments. If no arrangement to pay is made you will receive a penalty by HMRC.
Individual ISA limit £20k for 21/22; Junior ISA 9K; Child Trust Fund 9k;

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts Business, Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for both individuals and small & medium sized businesses (SME's). Helping and supporting both individuals and limited company owners / self employed people throughout the UK and the world, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

key points of winter statement - vat, self employed grants, job support scheme, 10 yrs on bbl loans, delays to paying taxes

9/25/2020

The Chancellor yesterday announced a raft of new measures to support businesses in the UK. Below are the key points to help you and your business:

Job Support Scheme - to replace the Furlough scheme

Government will subsidise the pay of employees who are working fewer than normal hours due to lower demand
Employees must do at least a third (33.3%) of their normal hours
Employers will pay staff for the hours they have work
The government and the employer will pay a third (33.3%) each for the hours they can't work
This means someone working a third of their hours would receive 77% of their pay
The government part of the grant is capped at £697.92 per month per employee
All small & medium sized businesses are eligible for the scheme
It is open to employers even if they have not previously used the furlough scheme
The Job Support scheme will run for six (6) months starting in November 2020 and replaces the "furlough" scheme
Basically means the government will pay a maximum of 22% of someone's wages, down from 80% at the start of the furlough policy

Example:

If an employee (e.g. Mr Bob Smith) works reduced hours the employer pays for that. And in addition the employer and government pay one third of the lost pay each (up to the cap £697.92).

So if Mr Bob Smith normally worked for an employer at £2,000 a month, and then worked 50% hours, he would get £1,000 normal pay plus £333 extra from their employer and £333 from the government.

Self Employed Support - SEISS Grants

A grant will be available to those eligible for the Self Employment Income Support Scheme Grant (SEISS) previously ie basically a 3rd SEISS grant payout and possibly a 4th
The grant will cover three months' worth of profits for the period from November 2020 to the end of January 2021
It will cover 20% of average monthly profits up to a total of £1,875 (previously £6750 and £7500)
A further grant may be available to the self-employed to cover February 2021 to the end of April 2021, depending on circumstances

Bounce Back (BBL) Loans and Covid (CBILS) Loans - time extended from 6 to 10 years to repay + chance to pay interest only

Bounce Back Loans will be extended from 6 to 10 years, cutting down monthly repayments by nearly a half per month after the 12 month interest free period - may need to apply to your bank for this
Coronavirus Business Interruption Loan Scheme lenders will also be able to extend the length of loans from the current maximum of 6 to 10 years - may need to apply to your bank for this
Extension of deadline for the government's coronavirus loan schemes to the end of November 2020
Businesses that are struggling can choose to make interest only payments for six months and those "in real trouble" can apply to suspend repayments altogether for six months - will need to apply to bank to get this - businesses will not see their credit rating fall as a result, the Chancellor said.

Tax - 5% VAT to remain longer, VAT deferred interest free payments, more time to pay HMRC

The 15% emergency VAT cut for the tourism and hospitality industries will be extended from January 2021 to 31 March 2021
Businesses who deferred their VAT bills will be able to pay back their taxes in 11 smaller interest-free instalments - this will need to be requested to HMRC VAT dept
Self-assessment income taxpayers who need help will be given more time to pay tax bills - again need to request from HMRC prior to deadline

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

summer statement 2020 - coronavirus update and government policies - key points

8/13/2020

£1000 Job retention bonus to encourage firms to retain furloughed staff

A one-off £1000 payment to employers for every furloughed employee retained to the end of 31 January 2021 - likely to be a credit to your paye bill rather than a cash payment
Applies to workers earning £520 plus per month

5% VAT for six months - VAT cut for restaurants, hotels and attractions only

Value added tax cut down from 20% to 5% from 15 July to 12 January 2021 for selected areas
Food and non-alcoholic drinks in restaurants, pubs and cafes, as well as hot takeaway food will be covered
Hotels and B&Bs and admission to attractions such as theme parks and cinemas are also affected
Most importantly the 5% VAT cut rate does not need to be passed on to customers or for all items or even at all, so some business may still charge 20% on items

Zero Stamp duty up to £500,000 and 'green homes grant'

The threshold for stamp duty on residential property in England and Northern Ireland will rise from £125,000 to £500,000 - 1st time buyers will gain as will landlords who will see their stamp duty reduced greatly for 2nd homes
Applies from 8 July until 31 March 2021 only
Up to £5,000 per household for 'green' projects to make homes more energy efficient in England - although the requirements and finer details mean that few people will be able to take advantage and it needs to be done via an approved builder which my end up costing you more anyway
Up to £10,000 per household fully funded for low-income households - but be careful you cannot just renew your boiler or double glazing etc

50% Discount on restaurant meals in August only Monday to Wednesday

"Eat out to help out" scheme offers up to 50% discount for every diner, up to £10 a head, from Monday to Wednesday throughout August 2020
Covers food and non-alcoholic drinks - only not other items
Applies at participating restaurants, pubs, cafes only - it is not compulsory all should participate
Restaurant owners can claim the discount in full from the government via an online form - the speed and amount of return is yet to be seen

Financial Support for young workers

"Kickstart scheme": £2bn fund to pay for six-month work placements for 16 to 24-year-olds on universal credit - you have to be on it to be eligible
Payments will cover national minimum wage for 25 hours per week, plus national insurance and pension contributions per person
£1,000 grant per trainee is available for employers who take on new trainees aged 16-24
£2,000 grant for employers per apprentice under 25 hired, £1,500 for those over 25, for six months starting 1 August
Participants can expect to receive £455 per month if they are under 18 years of age, £645 per month if 18 to 20, and £820 per month if 21 to 24
No need to retain trainee after 6 months but they must be claiming universal credits - a good way for businessess to employ young part time trainees / employees and have the government pay for their wages for 6 months

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

Coronavirus government support key points

3/21/2020

A large number of clients are asking us for help in understanding how the UK Government is going to support the employed, self employed & SME businesses during the coronavirus COVID-19 pandemic. The Prime Minister & Chancellor announced billions of pounds would be used to prevent businesses going under and support workers who have suddenly become unable to work.

Below is a helpful list of key points:

Salaried Employees - the Coronavirus Job Retention Scheme

All registered employers in the UK are eligible via HMRC
Government grants will cover 80 % of the salary of retained workers up to a total of £2,500 a month. Employer has to apply.
This cover is for workers if employer is unable to pay, or are unable to work due to the coronavirus outbreak.
Will become 'furloughed' and should not be working while under the scheme.
Scheme will cover wages lost backdated to March 1, and applications will open before the end of April.
Scheme will last until June 1, with potential to be extended & unlimited funds will be available.

For Self employed, contractors and freelancers

Unfortunately - No specific plan to compensate contractors, freelancers and self-employed.
Chancellor advised those self employed affected by coronavirus to apply for the Universal Credit scheme, which has had its requirements and conditions changed for this crisis.
Self-employed will not have to make the self assessment (tax return) payment on account that was due by 31 June 2020 now until 31.1.2021. This effectively means the 31 June 2020 payment of tax is suspended.
The minimum income floor for Universal Credit is to be suspended, meaning all those who are self-employed can access Universal Credit at the rate equivalent to statutory sick pay for employees ie £94.25 a week.

Universal Credit and tax credit increase

Standard Universal Credit allowance and Working Tax Credit basic allowance are both being increased by £1,000 a year to help families ie both will increase by £20 per week on top of planned annual uprating.
New claimants will not need to prove 'gainful self-employment' if they are self employed and applying for Universal Credit.
Claimants with Covid-19 or are self-isolating can receive advance payment upfront without having to go to a jobcentre.

SME Small & medium businesses - Coronavirus Business Interruption Loan Scheme

Interest-free loan scheme announced last week has been extended from six months to 12 months. Scheme starts Monday March 23.
The next quarter of VAT payments due from companies at the end of March has been deferred until the end of June. The VAT return still needs to be filed but it does not need to be paid if the business is struggling - allowing it to use the VAT 20% collected as cashflow for the short term.
Additionally all businesses and self employed workers in financial distress and with outstanding tax liabilities, may be eligible for HMRC's Time To Pay service - ie HMRC allowing up to 12 months to pay off debts

For renters

After announcing mortgage 'payment holidays' for up to three months for homeowners last week, a £1 billion package to support renters is announced by increasing the housing benefit under Universal Credit.
Recipients would receive welfare to pay at least 30 percent of market rents for their local area.
No rental pause from the government.

Other help

Mortgage lenders have agreed that they will allow up to 3 months mortgage holiday for customers experiencing financila difficulty.
Relaxation of planning permission to allow pubs and restaurants to start providing takeaway services without planning application
Insurance claims for loss of earnings should be valid if your business is effected by a government requirement to close eg pubs, bars, cafe, nigh clubs, gyms, restaurants etc
Business Rates discount up to 100% for 1 year for leisure and hospitality, contact your local council for more info
Grants of up to £25,000 to retail, hospitality & leisure businesses operating from small premises with rateable value between £15k to £51k
One off grant of £10,000 to around 700k businesses eligible for small business rate relief (SBBR) to help meet on going business costs
Bank of England base rate dropped to 0.10% interest will help those with variable interest rate loans and mortgages by reducing their monthly payments - press your bank to adopt immediately and not delay by months as they normally do

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames and Epsom they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

SPRING STATEMENT 2018 - MAIN POINTs for business

3/20/2018

In a nutshell it was typical political waffle and little substance. But what we want to know and what our clients want to know is what it means for them. Well check out the simple list below to save time and get straight to the main factual points.

Minimum wage rates expected to keep rising. The National Living Wage will rise to £7.83 per hour from April 2018 - meaning more pressure on small business as wage costs rise and sales decrease, leading to further staff cut backs or new ways to automate work with fewer staff needed e.g. self-service.
Country still has debt interest payments of £50 billion per year as before - no surprises there.
£1.5 billion has been allocated to departments to prepare for Brexit in March 2019 - meaning less to spending on other areas such as NHS etc.
£1.67 billion to be given to London to start building a further 27,000 affordable homes by end of 2021-22 - 27,000 properties for a city that houses 8.63 Million people (last count in 2017) means nothing much happening and developers pocketing the vast amount of the money and selling the flats at 300k plus. But there will be work for skilled professional tradesmen / women as sites get redeveloped.
Consultation on a new VAT collection mechanism for online sales - e.g. Ebay, Amazon, Airbnb etc. sellers are to be targeted further as already explained on previous blogs. HMRC wants the tax on this hidden income and Ebay and Amazon have already cut deals with HMRC to not look at their own finances and instead give will happily provide HMRC info on sellers on their websites.
Consultation on tax changes to discourage use of single-use plastic, including takeaway boxes and disposable cups - like plastic bag charge of 5p.
Next revaluation of business rates to be brought forward by one year to 2021 - a lot of businesses ended up with nil business rates for small shops and double or more for large shops in the last change in April 2017. Meaning larger shops are becoming empty in out of town areas and the lack of government income from smaller units. Do they increase small unit from nil and reduce for large? - We think so it’s the likely outcome for 'no idea what it’s like to be self-employed' civil servants in Whitehall.
Consultation launched on the role of cash in the new economy, including future demand for 1p and 2p pieces and £50 notes. Basically the most significant hidden point in the whole statement, basically it means they want to move to a European style system where everyone has to provide a receipt for work and cash payments above a certain amount are no longer permitted. The plan in the small print of actual statement (not speech) say they want to crack down on cash-in-hand payments and the government expects to rake in as much as £3.5 billion a year in tax from cash payments.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

How to plan and budget for paying tax

1/18/2018

We like lists and we know you do too. So here is a short list about a few things to bear in mind when tax deadlines are looming:

1)   Keep all necessary paperwork organised and make sure to keep all paperwork even after the tax years passed a minimum of 5 years as HMRC can put you under a tax investigation at any point reaching as far back as 10 years.

2)   Make sure to plan ahead with your finances so you don’t fall short when deadlines arrive. Save and put money aside for the tax due. HMRC gives you approx 9 months from your year end to budget for this and will not normally extend the deadline without penalising you with extra charges and fees,

3)   Be conscious of when the deadlines are arriving and what state your finances are in. Don't forget when its due and keep a reminder on your calendar for it.

It’s important that you know how much tax you’re due to pay as this helps you to plan your finances around how much is due. So the earlier you get your paperwork together the earlier an accountant can put it together and let you know. Leave it to the last minute and you may be left short of both information and time.

HMRC offer a ‘Budget payment plan’ if you are struggling to pay the tax - which allows you to pay over a number of months as determined by HMRC (not you). You may also be permitted to stop payments for up to 6 months, this option needs to be set up with HMRC for payments through direct debit and when payments are made they need to be regular.

If you would rather not use the HMRC’s budget payment plan then you can design your own budget plan which could allow you to put money aside for your tax payments eg borrow money from elsewhere, the pro’s for this is that you don’t get charges the fees from HMRC and have the restrictions which HMRC place. The cons are that you need to be self motivated to keep up payment with the your budget plan or lender.

Alternatively if you prefer to pay in one lump sum then it’s even more important that you’re aware of how much tax you’re due to pay, how far away the deadlines are and your financial state.

Overall awareness of the deadlines and you’re own particular financial situation can guide you to making a budgeting plan for tax returns. It’s also worth bearing in mind that just a bit of planning ahead can save you from unnecessary fines and penalties from HMRC.

By Anon at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

Key points for business from autumn budget 2017

11/22/2017

Some of the main points for self employed and business owners from the UK Chancellor's Autumn budget announcement 22/11/17.

Tax-free personal allowance on income tax to rise to £11,850 in April 2018 before £11,500
Higher-rate tax threshold to increase to £46,350 before £43,000.
VAT threshold for small business to remain at £85,000 for two years, same as before.
£540m to support the growth of electric cars, including more charging points, remains to be seen.
A further £2.3bn allocated for investment in research and development, remains to be seen.
Rises in business rates to be pegged to CPI measure of inflation, not higher RPI, remains to be seen how it effects rates in 'real' terms.
Digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction to be subject to income tax as part of tax avoidance clampdown. Expected to raise about £200m a year, ie Ebay and Amazon sellers etc will be effected.
Short-haul air passenger duty rates and long-haul economy rates to be frozen, paid for by an increase on premium-class tickets and on private jets, remains to be seen.
National Living Wage to rise in April 2018 by 4.4%, from £7.50 an hour to £7.83. Bad news for employers as wages bills will rise.
Fuel duty rise for petrol and diesel cars scheduled for April 2018 scrapped, ok but nonsense really as the prices vary so much from pump to pump and depends on which day you purchase also.
Vehicle excise duty for diesel cars that do not meet latest standards to rise by one band in April 2018, bad news for older vehicles.
Tax hike will not apply to van owners, no change then.
Existing diesel supplement in company car tax to rise by 1%, bad news for diesel owners.
Stamp duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000, good news to help push sales.
To help those in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by all first-time buyers will be exempt from stamp duty, good news to help push sales.
100% council tax premium to be levied on empty properties, bad news for landlords.
Young person's railcard extended to 26-30-year-olds, good news for students and reduce travel for younger employees.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Worcester Park, Kingston upon Thames, Cheam, and Surbiton they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting companies, contractors and self employed people throughout the UK, they regularly help clients with their payroll and pension. And help grow their business by providing tailored advice.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

Spring budget 2017: Main Points for small and medium sized businesses

3/27/2017

HOW THE SPRING BUDGET 2017 AFFECTS THE SELF EMPLOYED & LIMITED BUSINESSES

The income tax personal allowance and the basic rate bands for this year’s tax return have already been announced. From 6th April 2017, personal allowance is set to increase by £500 to £11,500 and the basic rate band will rise to £33,500 from £32,000. This will result in a higher rate threshold of £45,000.

The Chancellor has proclaimed that the personal allowance will continue to rise to £12,500 and higher rate threshold to rise to £50,000 by the end of the Parliament. Also, the Capital Gains Tax annual exemption will increase by £200 in 2017/2018 from £11,100 to £11,300.

The rate of National Insurance Contributions for self-employed people will rise. Presently, self-employed individuals have to pay both Class 4 and Class 2 National Insurance Contributions (NICs):

Class 4 NICs at 9% are paid only on profits made between £8,060 and £43,000 and 2% on profits above the £43,000 threshold.
Class 2 NICs at £2.80 a week are paid only on profits above £5,965.

From April 2018, it has been announced Class 2 NICs will be abolished and Class 4 NICs will remain the same. As a result of this, the self-employed will save £145 annually. This will allow them to keep more of their money and be able to invest it back into their business.

Tax Free Dividend Allowance will be reduced from £5,000 to £2,000 from next year April 2018. This is because this will lessen the tax difference between the self-employed and employees. Those that will be affected, will be investors with stocks and shares worth over £50,000 outside an ISA.

£435 million will be given to support any business that have been affected by the business rates relief revaluation. Therefore, no small businesses will pay more than £600 coming out of the small business rates relief than they did in year 2016-17.

Financing local authorities will permit them to administer £300 million of discretionary relief to contribute in helping the businesses that are heavily affected by the revaluation.

Landlords and small businesses below the VAT threshold will be given an extra year to get ready for Making Tax Digital. Businesses that are owned privately (unincorporated businesses) that have a turnover under the VAT threshold will have until April 2019 to prepare for this before "Making Tax Digital" becomes mandatory.

Making Tax Digital is where businesses will have to use a specific digital software to maintain their tax records and update HMRC quarterly (every 3 months).

The introduction of this complex digital scheme, which is involving commercial supplies or accounting software, runs smoothly, there is a likelihood that there will be substantial administrative trouble, especially for those businesses that presently do not use an accounting software.

By Gopal Nath at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

Budget 2016 the main points for small businesses

3/26/2016

Small businesses and self employed individuals should be pleased with the chancellor's Spring Budget 2016. Because from 2020, the level of Corporation Tax will be reduced to 17%, less than the previously stated 18%. Making working through a limited company still a very tax effeicient choice. Capital Gains Tax (CGT) will also be reduced to 20% from 28% for higher rate taxpayers and 10% from 18% at the basic rate taxpayers. And the VAT threshold rising to £83,000.

Key Points for Small Businesses and the Self Employed:

From the 2017/18 Tax Year, the tax free Personal Allowance will increase to £11,500 and the Higher Rate threshold will increase to £45,000. With government target of £12,500 by 2020. Currently it is £11,000 from this April 2016.
From April 2020, Corporation Tax for UK Limited Companies will be reduced to 17%. Reduced annually from the current 20% level today.
Capital Gains Tax is now immediately reduced from 28% to 20% for Higher Rate taxpayers and for Basic Rate taxpayers CGT is reduced from 18% to 10%. This is a drop in tax rates and will help individuals who want to invest in companies or sell assets. Unfortunately though, individuals who own residential properties will continue to pay 18% and 28%, this relief is not extend to them.
Business Rates Relief threshold is to be increased from £6000 to £15,000 to help small businesses.
Tax on a Director Loan will increase from 25% to 32.5% with Dividend Tax changes.
From this April 2016 Dividends taken will only be tax free up to £5000 after which the tax rates are 7.5%, 32.5% and 38.1% (basic, higher, additional rates).
VAT Registration threshold increases to £83,000 from April 2016.
From April 2017, New Allowances of £1,000 per annum for property and trading income for very small traders and property landlords eg online trading.
From 17 March 2016, New Stamp Duty rates introduced for commercial property. This will become up to £150,000 at 0%; between £150,000 and £250,000 at 2%; and over £250,000 at a flat 5%.
From 17 March 2016, Leasehold properties will pay 2% Stamp Duty if the net present value of the transaction is more than £5 million and above.
New Tax Avoidance measures to be introdued to stop individuals disguising income as loans and imposing national insurance on termination payments over £30,000 from April 2018.

Other key points are:

Class 2 National Insurance to be stopped from April 2018, saving of £143 per annum.
Insurance Premium Tax increased from 9.5% to 10% across all types of insurance premiums.
A new 25% Top-up ISA for all under-forties who save with the Lifetime ISA. For every £4 that is saved the government will top-up by a £1, to the max value of £4,000 per annum.
Tax Free Allowance for saving into ISAs has increased from £15,000 to £20,000.
Reforms of Class 4 NIC so the self-employed pay enough towards state pension entitlement.
The Annual Investment Allowance (AIA) increased to £200,000. Majority of business can claim AIA towards their investment in assets and stand to benefit from relief.
New Pay as you go tax. From 2018, small businesses, self-employed, and landlords can elect to pay taxes on a pay-as-you-go basis. Which may help tax payers manage their cash flow better.
Lifetime Pension Allowance will be reduced from £1.25 million to £1 million.
Personal Savings Allowance is set at £1,000 for basic-rate taxpayers, £500 for higher rate taxpayers. But additional-rate taxpayers get zero personal saving allowance.

And finally other significant point were:

From 17 March 2016, Entrepreneur's Relief to be extended to cover investment in unlisted companies. with condition that the shares must be held for more than three years.
There is also greater loss-relief flexibility for companies from April 2017. Allowing many group companies to offset losses easily with lesser restrictions.
First-year Allowance of 100% for low-emissions car owners; the car-emissions threshold has been reduced from 75gm/km to 50gm/km.
More restrictions to offsetting profit with losses carried forward for companies earning profits of £5 million or more.
The Main Rate of Capital allowances attached to the car-emissions threshold reduced to 110gm/km.
Employee shareholder Status changes. Employees will receive a lifetime allowance of £100,000 on CGT so that gains of up to £100,000 are tax-free for employee-shareholder status employees.
NIC Relief on employer-arranged pension advice will increase from £150 to £500
Legislation to be introduced in Finance Bill 2016 to prevent offshore structures being used to avoid paying taxes on property development.
Also there is a new Sugar Tax to be introduced in 2 years time.

In Conclusion
Overall, good for small businesses and individuals. Not so great for contractors and landlords.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Surbiton they are considered in the Industry to be experts accountants for small businesses. Helping and supporting business throughout the UK, they regularly help new and established businesses to succeed.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

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