The Spring Budget might have been low-key affair, but tens of tax changes will come into force in April for the 2017/18 tax year.
So it’s time to start considering how the changes will impact you, your family and your business.
1. Corporation tax changes
The rate at which you pay corporation tax will reduce to 19% on applicable profits form 1 April 2017. Currently corporation tax stands at 20%.
2. Personal allowance
In 2017/18 the personal allowance will increase to £11,500 (£11,000 in 2016/17). This is the amount an individual can earn before paying tax. 29m taxpayers will benefit from this.
3. Higher-tax threshold
The basic rate band (20%) will also increase to £45,000 meaning more can be earned before you would enter the higher rate tax (40%) bracket. For the 2016/17 tax year the threshold was £43,000.
4. Vehicle/Car tax
From April 1, only 100% electric cars will be exempt from road tax. This is bad news for those looking for low-emission or diesel cars, some of which avoided the tax. This applies to only new cars bought after April 1.
5. VAT threshold
From 1st April 2017, the VAT registration threshold will rise from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000. The measure is expected to take 4,000 small businesses from having to register for VAT.
6. Flat VAT rate scheme
A new rate 16.5% VAT rate will be introduced for businesses with limited costs. This change might mean that the flat rate VAT scheme might not be the best option for some contractors going forward.
7. Business rates
From 1 April 2017 the government said it will:
- Permanently double Small Business Rate Relief (SBRR) from 50 % to 100%
- Businesses with a property with a rateable value of £12,000 and below will receive 100% relief
- Pubs with a rateable value up to £100,000 will be able to claim a £1,000 business rates discount for one year
8. For micro entrepreneurs
People with property or trading income will not need to declare pay tax on the first £1,000 they earn from each source.
9. National Living wage (NLW)
NLW for over 25s will increase from £7.20 to £7.50 an hour form April 1
10. Dividend tax allowance
No changes for dividend tax allowance in 2017. It will be reduced from £5,000 to £2,000 from April 2018.
11. ISA allowance
From April 6, ISA Allowance will increase from £15,240 to £20,000
12. Tax free child-care
Due to be rolled out in April 2017, the scheme will help around 2 million households. It will be available online and means that for every 80p paid in, the government will add 20p, up to a maximum of £10,000 a year. The maximum state contribution per year will be £2,000 per child or £4,000 for disabled children. To qualify, parents must be in work and earn at least £115 per week, but no more than £100,000 per year. It’s available for children up to the age of 12 and can also be used by for self-employed parents.
13. Making tax digital
Unincorporated businesses such as sole-traders, landlords and the self-employed with an annual turnover below the new £85,000 VAT registration threshold, will have until April 2019 to prepare before MTD becomes mandatory. Under MTD, business will have to use digital software to keep records and update HMRC.
If you want to find out more about how any of these changes may affect you, your family and your business, it’s worth speaking to your accountant.