Further to the Chancellor’s first and last Spring Budget speech yesterday we are pleased to publish our Budget Summary providing a commentary on the main points covered.
The Budget saw the government perform yet another U-turn on their election manifesto pledge that “we will not raise VAT, National Insurance Contributions or Income Tax”. Following last year’s increases to the income tax payable on dividend income the so called ‘Tax Triple Lock’ has effectively been broken for a second time with the increase in Class 4 National Insurance (NIC) and a reduction in the dividend allowance. Given that the self-employed do not receive the same rights and benefits as the employed in terms of holiday pay, sick pay, employer pensions etc. there is a justification for the NIC rates remaining disparate. If, however, the government is attempting to align the position between the employed and self-employed then we would welcome their thoughts on how they address this issue.
We also welcome the announcement that the introduction of quarterly tax reporting has been delayed for 12 months for businesses and landlords with a turnover of less than the VAT registration threshold of £85,000. Unfortunately this does mean that any business/landlord with turnover greater than £85,000 do have to commence quarterly tax reporting for the first accounting period commencing after 1 April 2018. This is a significant challenge, particularly for those businesses who are currently keeping their records manually. We are currently in the process of reviewing our client base with a view to commencing preparations for Making Tax Digital and will be in touch with those affected over the coming months albeit details are not fully available yet.
After poring over the small print of the supporting publications there aren’t any major surprises, a lot of the technical announcements were simply a restatement of changes announced previously. The key announcements which are likely to impact on the typical small business are the following:
Posted – 09/03/2017