For the small business owner
there was a fair amount to digest following Chancellor Philip Hammond’s first
Autumn Budget on 22 November. Here we provide an at-a-glance summary of the key
points.
VAT Threshold
There were murmurings of a
potential change to the VAT threshold, but this has remained at £85,000 for at
least the next two years, most likely due to heavy opposition from small
business organisations. The news has been welcomed by bodies such as the
Federation of Small Businesses (FSB), which have been campaigning on the
subject of VAT reform for some time, arguing that it has the potential to drain
the resources of the smaller business. The stay could however be just a
temporary measure, with a rumoured overhaul to the VAT system coming in 2020.
Business Rates
From April 2018 the Retail Price
Index (RPI) will be replaced with the Consumer Price Index (CPI) with the CPI
being used to calculate business rates. This should in practice save businesses
quite significantly, with collective savings reckoned to be in the region of
£2.3 billion over three years.
Staircase tax was abolished with
a promise to business owners affected by it since it was introduced that their
original rates bills would be reinstated. There was also an announcement that
following the next business rates revaluation in 2022, such revaluations will
take place every three years rather than every five years.
Tax-Free Personal Allowance
The personal allowance has
increased from £11,500 to £11,850 per year. This will result in an overall tax
reduction in 2018/2019 of £1,075.
Research & Development Tax Relief
Small businesses that conduct
research and development and claim the RDEC standalone tax credit will benefit
from further tax relief measures. The rate will increase from 11 per cent to 12
per cent of a firm’s qualifying research and development expenditure.
British Business Bank Boost
The British Business Bank (BBB)
has been given a funding boost of £2.5 billion. This comes as part of a larger
£20 billion Patient Capital investment designed to assist fast-growing
businesses in scaling-up. The funding has the objective of encouraging more
long term investment in scale-up businesses carrying a greater risk. It’s the
biggest government commitment to date to the BBB.
National Living Wage
Partnership Tax
Legislation has been updated to
fall in line with commercial arrangements for allocating profit shares with the
objective of avoiding additional administrative burdens for taxpayers. The
changes will come into effect as of the tax year 2018-2019.
Marriage Allowance
The Marriage Allowance – the
amount of unused personal tax allowance that can be transferred between spouses
or civil partners - will increase to £1,185 as of April 2018. Marriage
allowance claims are now allowable on behalf of deceased spouses and civil
partners as of 29 November 2017.
If you have any queries or
concerns about the changes brought in by the latest Budget, why not discuss
them with your local bookkeepers?
