Category: Budget 2016

Autumn Statement 2016 - Main Key Points for Business

11/24/2016

Because we know you are a savvy lot and want to know the most up to date info without the extra side-helping of waffle. We've condensed the UK Chancellor's 2016 Autumn Statement to the key basic points to help.

Good News:

Personal Income tax free threshold will rise to £11,500 from 5th April 2017, from the current amount of £11,000
The government plans to raise the basic personal income tax free band to £12,500 and the higher rate to £50,000 by 2020
To stop upfront letting fees charged by estate agents in England "as soon as possible"
Fuel tax rise is postponed for another year
Plans to reform compensation for whiplash to help lower motor insurance costs
Plan to abolish the Autumn Statement, with an Autumn Budget from next year, and a Spring Statement from 2018
British business bank to unlock £1bn finance for growing firms through £400m into venture capital funds
Plan to double UK Export Finance capacity
Plan for 100% rural rate relief "giving small businesses a tax break worth up to £2,900"

Bad News:

Insurance tax to rise 2% from 10% to 12% from June 2017
Saving tax on salary sacrifice and benefits in kind to be stopped, with exceptions for ultra-low emission vehicles, pensions, childcare and cycling
Growth forecast downgraded to 1.4% in 2017 from 2.2%
Forecast growth of 1.7% in 2018, 2.1% in 2019 and 2020 and 2% in 2021.
Government no longer seeking a budget surplus in 2019-20
Government finances expected to be £122bn worse off until 2021 than stated in March's Budget
National Debt to rise from 84.2% of GDP last year to 87.3% this year, and 90.2% in 2017-18
Government's public spending this year to be 40% of GDP - down from 45% in 2010 previously
More funding to HMRC to crack down on tax avoidance and claw back money through fines and charges

Either way news (depending on your view point):

National Living Wage to rise from £7.20 an hour to £7.50 from April 2017
New savings bond through NS&I with 2.2pc interest rate over three years. Savers will be able to deposit up to £3,000. There will be more detail on this in the Budget next year
Employee & employer National Insurance thresholds to be equalised at £157 per week from April 2017
£220m funding to reduce traffic at build up points
£23bn funding for innovation and infrastructure over next 5 years
£2bn funding per year for research and development
£110m funding for East West Rail to have an Oxford to Cambridge Expressway
£1bn+ funding for digital infrastructure & 100% business rates relief on new fibre infrastructure
Rural Rate Relief to be increased to 100%, "giving small businesses a tax break worth up to £2,900"

By Anni Khan 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.

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Falling rates of UK corporation tax

11/5/2016

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Reduction of the UK Corporation Tax Rate

Before we head straight to reduction matter of corporation tax let us make ourselves clear what corporation tax actually is. Corporation tax is charged on the profit from all around the world of UK-resident companies, public cooperation and unincorporated businesses.

Companies based in foreign countries only pay corporation tax on UK profits. Any income companies make such as trading income, investment income and capital gains are charged under corporation tax unlike individual tax calculations. The corporation tax for the tax year 2015/16 the only rate applicable for corporation tax is 20%.

Ex-Chancellor of Exchequer Mr George Osborne announced his intention to cut down corporate tax rates to 15% or less to come within the competition with several other country's markets like Ireland which has 12.5% to exhibit to the world the UK's willingness to encourage more businesses to set up base in the UK.

Before this announcement the Ex-Chancellor set the target of slashing the corporation tax from 20% to 17% by 2020, which is 1% less than the target he set during the budget from 1st April 2015. Furthermore to corporation tax rate reduction Mr Osborne also announced about the changes in the carried forward trading losses for the companies (to be discussed in a later blog - watch this space).

Implication of reduction on the UK Corporation Tax Rate

The reduction to be made on the UK Corporation Tax to 17 % by 2020 is a good news for all the companies with the change in trade losses carried forward to be relieved against total general profit for the year rather than profit from the same trade and also can be relieved with group companies.

This actually gives businesses in the UK the greater chance to grow and invest with confidence and pay less taxes rafting alongside with the UK tax avoidance rules.

For the companies and corporate groups only running in the UK any reduction would be a good news especially owner-managed business (OMB) and small and medium enterprise (SME). Because they will simply pay less corporation tax in the coming years.

Corporation tax reduction will also encourage UK tax resident individuals to work through a limited company or to incorporate their business for the trading purposes. As working the way tax payers save paying tax and NI from band 1 20+9%, band 2 40+9% and band 3 45+2% to simply 20%.

Although the new dividend rule introduced in the current tax year has increased the income tax liability for many shareholders receiving dividends from the company, reduction in corporate tax to the level of 17% would constitute an immense bait and compensation tactic for shareholders in certain ways who are particularly affected.

But with the UK's new Chancellor of Exchequer, Rt Hon. Phill Hammond, things might be different as we still have to see if he is of the same insight as Mr Osborne. Certain restrictions on the carried forward trading loss relief of trading loss carried forward can only be relieved for the 50% of the total profit for the year for the large companies with earnings more than £5 million might incentivise multinational companies to relocate their headquarter to some different countries compromising the tax rate.

There is a possibility for these companies to claim loss relief and not pay any taxes for the year to help with their cash reserves to help them with their cash flow. But these multinational companies, some of which already exist in the UK, will have to consider these incentives if they seek to run operations in the UK.

In conclusion it is good news for companies based in the UK, such as OMB and SMEs. And for UK tax residents who are still self employed this is the time to set up a limited company and trade throigh this and save tax. At Tax Affinity Accountants we can help you register a tax efficient limited company and help you take advantage of all the tax saving benefits and allowances available.

By Mizon Maharjan and Anni Khan 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.

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Budget 2016 the main points for small businesses

3/26/2016

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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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Autumn Statement 2016 - Main Key Points for Business

Falling rates of UK corporation tax

Budget 2016 the main points for small businesses

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