On 8 March 2017 Phillip Hammond delivered his first Spring Budget as Chancellor of the Exchequer, bringing a number of changes that will have a significant impact to small businesses in the UK. In particular the Chancellor focused measures on levelling the playing field between the self-employed and those taxed under the Pay As You Earn (PAYE) regime.
Some of the key points for owner managed businesses arising from the Spring Budget are summarised below:
• The personal allowance (the amount of income a UK resident can receive tax free) is increasing to £11,500 in 2017-18, with an increase to £12,500 forecast by 2020;
• The rate of class 4 National Insurance Contributions (paid by self-employed individuals) will rise from 9% to 10% for earnings between £8,060 and £43,000 with effect from April 2018;
• Privately-owned SMEs will be granted an additional year to prepare for the Making Tax Digital (MTD) regime and mandatory quarterly reporting;
• The tax free allowance on dividends will be reduced from £5,000 to £2,000 with effect from April 2018 (with the exception of shares held in a stocks and shares ISA which will remain tax free);
• Funding of £200m for local broadband infrastructure to enhance the connection speeds of business and homes across the UK;
• The annual rate of inflation is forecast to grow from 2.3% to 2.4%with the growth forecast upgraded from 1.4% to 2.0% in 2017-18.
At Tayabali Tomlin we are passionate about supporting small business by providing proactive and innovative solutions.
We believe in thinking differently, challenging the status quo and changing the lives of entrepreneurs, by helping them grow, increase profits, reduce tax bills and plan for exit.