Thursday 9 March 2017

Spring Budget 2017


Philip Hammond's first and last Spring Budget is not quite as bland as, perhaps, it initially seemed, and some of the key points are discussed below:

The Chancellor has drastically cut the dividend allowance that was introduced by his predecessor, down from £5,000 to just £2,000 per annum, which will not go down well with OMBs (owner managed businesses).  This measure will impact from April 2018 so there is still one more year (2017/18) at the current level of dividend allowance of £5,000 tax-free.

The self-employed, with profits in excess of £16,250, are on the receiving end of a hike in their Class 4 National Insurance Contributions, although this increase is an effort to ensure more equity in the National Insurance Contributions between the employed and self-employed, now that the self-employed are receiving better state pension provision under the new state pension rules, which commenced in April 2016.

From 1 April 2017, the VAT registration and deregistration thresholds will increase in line with inflation by £2,000 to £85,000 and £83,000 respectively.

As discussed elsewhere on our News Blog, the date for the implementation of Making Tax Digital has been postponed for one year, until April 2019, for those businesses and landlords whose income is below the VAT threshold.

The main changes to the non-dom regime legislation have been well documented and draft legislation is already out for consultation but, in the Budget yesterday, there were a few minor additions - namely the extension of the transitional rule permitting non-doms to segregate their existing "mixed fund" accounts so that now this applies to pre-2007/08 accounts, too.   In addition, in order to encourage UK investment by non-doms, the Chancellor announced some changes to Business Investment Relief to make it more attractive and more widely available.

There is no change to the proposed reduction in corporation tax rates, so the new 19% rate will apply from next month, as originally intended.

If you have any questions on any of the above, or on other provisions announced yesterday, then please contact us on:  info@petersonsims.com
 

MTD: Part Four - A Reprieve!


Philip Hammond delivered some very welcome news yesterday when he announced that, for all businesses & landlords with income below the VAT limit (now £85,000), the implementation of Making Tax Digital will be delayed for one year until April 2019.

This reprieve of one year offers the opportunity, at last, for proper foundations to be laid for MTD and it gives HMRC more time to run simulations and iron out the problems which will inevitably crop up within their systems.  It also provides more time to implement digital support for the small businesses and landlords impacted by MTD.

HMRC's original time frame of April 2018 was always over ambitious.   Software firms, in particular, were facing impossible deadlines to provide the software packages that would underpin MTD and the accountancy profession was anxious that HMRC's proposed support systems would be inadequate.  Education of those impacted by MTD can now be delivered in a staged and measured way, with businesses having the time to get proper help to prepare for "D-day" in April 2019. 

In addition, this one-year postponement will also allow more time for the professional accountancy bodies and other interested parties to continue to lobby the Government over those parts of the original MTD proposals that we feel have not been properly analysed, including the very important issue of the real cost to businesses of MTD.