Following the unveiling of Phillip Hammond’s first – and last* – Autumn Statement, it’s great that the Chancellor immediately recognised how important productivity is as the UK economy competes with other G20 members.
There were some notable highlights for business and personal taxation this year. In particular, committing to reduce the burden of business rates by £6.7 billion over the next 5 years and cutting the rate of corporation tax to 17% by 2020 (the lowest in the G20), is a much needed boost.These are just a couple of steps that will help keep the small business growth on track.
It’s also great to see the government’s forthcoming commitment to raising the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of the Parliament. Increases to the personal allowance over the last Parliament took 4 million of the lowest paid out of income tax altogether.
Another great initiative for the self-employed is the alignment the National Insurance secondary (employer) threshold and the National Insurance primary (employee) threshold from April 2017. This means both employees and employers will start paying National Insurance on weekly earnings above £157. Moreover, Class 2 NICs will be abolished from April 2018. We approve these proposals. Anything that simplifies the payment of National Insurance for both employers and self-employed is a good thing.
Including the above, here are other important tax and money highlights for small business owners
Pay hikes for minimum wage earners
- The minimum wage will rise 30p to £7.50 an hour for over-25s - up from £7.20 currently.
Insurance tax rises
- Insurance premium tax will rise - again - to 12%. That means a 2% rise on your car insurance (as well as you home insurance and travel insurance). Add another £51 to the average family's insurance bill.
- No change to corporation tax plan as announced previously - will drop to 17% by 2020
Sacrifice of Salary sacrifice schemes
- Sadly, anyone who gets a small perk like a company car, gym membership, computer or phone tax free is in for a shock. The Chancellor announced that the tax break will be stripped from everything except childcare, pensions, cycle-to-work schemes and ultra-low emission vehicles. This means you could have hundreds of more pounds in tax
Boost for drivers
- Fuel duty will be frozen - so no immediate rise in petrol and diesel prices.
- More charging points for drivers of electric cars – a good boost
Good news for savers
- A new 2.2% savings account is being launched - letting you save up to £3,000.
Tax free childcare
- Tax-free childcare schemes, rolling out across Britain in early 2017, will aim to help parents save up to £2k per child. However, any family which has a third or subsequent child born after April 2017 will not qualify for Child Tax Credit. This will also apply to families claiming Universal Credit for the first time after April 2017. We know from announcements made in the previous Budgets and Autumn Statements that from September 2017, parents earning less than £100,000 a year and working more than 16 hours a week will be able to claim an additional 15 extra childcare hours.
Universal credit users (a bit) better off
- People receiving universal credit will be able to keep more of it when they enter work. The taper rate will go from 65% to 63%.
And last but never the least, no more Autumn Statements!
*And to the biggest cheer of the day, the Chancellor finished by announcing it was his first and last Autumn Statement as he has decided to abolish it. From 2017, the Budget will go back to its traditional autumn appearance while there will be a Spring Statement from 2018.