We were delighted to be in parliament for the Chancellor’s Autumn Budget.  As promised in our earlier post, and as has been our custom for the past 35 years, here is our summary of the main announcements.  Any questions, please get in touch at 028 796 31343.

Personal Allowance

The Chancellor announced that for 2018/19 the individual personal allowance will rise from £11,500 to £11,850, and the higher rate threshold will increase from £45,000 to £46,350.  The rates of tax will remain at 20% and 40% for the basic and higher rates, and the additional rate of tax is unchanged at 45%.

Corporation Tax

The rate for 2018/19 will remain unchanged at 19%.  However, the chancellor announced changes to the way companies’ chargeable gains are calculated.

Capital Gains Tax Relief indexation for companies will be frozen from 1^st Jan 2018.  This relief was originally introduced to avoid taxation of gains which were attributable to inflation.

Dividends

The dividend allowance is to be reduced from its current tax-free amount of £5000 p.a. for 2017/18 to £2000 for 2018/19.  This measure will cost basic rate taxpayers £225 and higher rate tax payers £975 p.a.

Value Added Tax

The VAT registration threshold will remain unchanged at £85,000 for the next two years until April 2020 while the government consults on future thresholds.  It has been widely suggested that this should be lowered to bring more businesses into the VAT net.  Apparently, the government suspects that small businesses deliberately keep their turnover under the VAT registration threshold in order to avoid paying one sixth of their takings to the Treasury!

Capital Gains Tax

The annual exempt allowance will rise from £11,300 at present to £11,700 in 2018/19.

Stamp Duty

This was the most eye-catching feature of the Chancellor’s speech.  He has abolished stamp duty for first-time buyers paying up to £300,000 for a residential property.  On a property of £250,000, this will give a saving of £2500.

Excise Duties

In 2018, fuel duty will remain frozen for the eighth year in a row.  After years of encouraging us to buy diesel cars, the Treasury has decided that a road tax increase of up to £500 will be imposed on new diesel cars to crack down on pollution.  This charge will be avoided as soon as manufacturers bring forward the next generation of cleaner diesels.

Increase of 28p on a packet of cigarettes (2% above inflation).

Duties on beer, cider, wine and spirits will be frozen, with increased duties on cheap, high strength alcohol drinks.

Air passenger duty on short-haul flights to be frozen for the sixth year in a row.  Extra duty of £16 will be levied on first class travel tickets and £47 on private jets.  In principle, this may seem counterproductive at a time when the government’s aim is to make Britain more attractive for international business post-Brexit.

Enterprise Investment Scheme

The annual investment amount has been doubled to £2million provided the amount goes to knowledge-intensive companies.  The government will attempt to disallow investments in low-risk capital preservation schemes.

Making Tax Digital

The government has postponed plans to make businesses and landlord keep digital records and report quarterly to HMRC.  They have abandoned their proposals to make small businesses and landlords subject to the MTD regime.

Final Thoughts

Once again, electoral considerations have forced the Chancellor to postpone the long-held aim of balancing the budget.  It now looks unlikely that this will be achieved within the next ten years.

The stamp duty cut may actually be neutral at best as prices of lower cost homes may rise to counter the saving.

If you have any questions about this Budget Announcement or about taxation for your business, please feel free to email jb@johnbarfoot.co.uk, or phone 028 796 31343.

John Barfoot has been writing a Budget summary at each announcement for the past 35+ years.  It will be published here and sent out first to clients and others who ask to be included on the list.  If you would like to be the first to hear important tax announcements and find out how they will affect you and your business, then add your email address below.  We’ll also send you a selection of our most popular posts.

Summary of the main announcements in the Spring Budget, 8th March 2017

The Chancellor confirmed that the individual personal allowance will increase to £11,500 for 2017/18 from the current rate of £11,000.

The Higher Rate Threshold will rise by £2,000. This means that the point at which the higher rate of Income Tax is payable will increase from £43,000 in 2016 to £45,000 in April 2017.

The rates of tax for 2017/18 will remain at 20% and 40% for the basic and higher rates and the additional rate of tax remains at 45%.

Corporation Tax

Corporation Tax rate, currently at 20% for 2016/17 will drop to 19% from 1^st April, 2017. It will fall to 17% by 2020 – the lowest in the G20.

The review of the Research and Development Tax Credit regime for small and medium sized companies has found that the UK’s R&D regime is an effective and internationally competitive element of the government’s support for innovation. To further support investment, the government will make administrative changes to the Research and Development Expenditure Credit to increase the certainty and simplicity around claims.

Companies will have to use digital software and update HMRC on a quarterly basis from 1^st April, 2020.

Dividends

Just one year after its introduction in April 2016, the dividend allowance will be reduced from £5,000 to £2,000, to reduce the tax differential between the self-employed and employed, and those working through a company. From April 2017 this measure will cost basic rate taxpayers £225, higher rate taxpayers £975 and additional rate taxpayers £1,143 a year.

Value Added Tax

Registration and deregistration thresholds – From 1 April 2017 the VAT registration threshold will increase from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000.

The rate of VAT remains unchanged at 20%.

National Insurance

The government has already announced that it will abolish Class 2 NICs – a flat-rate charge on the self-employed – from April 2018.

However, Class 4 National Insurance Contributions on the self-employed will rise from the current rate of 9% to 11% over the next two years.

The Chancellor believes this will be fairer as the self-employed have always paid less NIC than employees. He didn’t mention that the self-employed do not get the same benefits as the employed – no employer pension contributions, sick pay nor holiday pay. (And he missed the obvious point that he could have been fairer to everyone by cutting the NIC on employees!)

Fuel Duty

Vehicle Excise Duty (VED) – From 1 April 2017, VED rates for cars, vans and motorcycles registered before April 2017 will increase by Retail Prices Index (RPI).

HGV VED and Road User Levy – HGV VED and Road User Levy rates will be frozen from 1 April 2017.

Air Passenger Duty

APD rates for 2018-19 will be increased in line with RPI.

Miscellaneous

Making Tax Digital

The government will provide an extra year, until April 2019, before Making Tax Digital is mandated for unincorporated businesses and landlords with turnover below the VAT threshold. This will provide them with more time to prepare for digital record keeping and quarterly updates.

Other unincorporated businesses and landlords will be required to use digital software to keep tax records and update HMRC on a quarterly basis from April, 2018.

Final Thought:

If you want less of something, you tax it more e.g. tax on cigarettes and sugar.

Maybe the Chancellor should reflect that the same might apply to self-employment?

FEEL FREE TO CONTACT ME FOR FURTHER DETAILS ON ANY OF THE ABOVE:

 JOHN BARFOOT   028 796 31343

OR EMAIL ME AT   jb@johnbarfoot.co.uk

Click here to read our summary of the Chancellor’s Budget 8th July 2015

The chancellor presented an upbeat message with various interesting and helpful changes to the existing tax regime.

The projected cut in the rate of Corporation Tax to 18% in 2020 was unexpected and welcome, leaving us with a major incentive to attract foreign investment.

For manufacturers and farmers, the Annual Investment Allowance increase from its projected level of £25,000 next January to a new permanent level of £200,000 per annum is both realistic and welcome. For the remainder of the current year the allowance remains at £500,000.

Not so welcome will be the cut in tax relief for properties bought to let. Here the tax relief on mortgage interest is to be gradually cut from its present level of as high as 45% back to 20%. However this is mitigated to some extent in that we have historically low interest rates currently and probably for the foreseeable future. An interesting change to property rentals is the end of the 10% depreciation allowance on furnishings, to be replaced by relief limited to the actual cost of replacement items – generally not nearly so generous. All calculated to take some of the heat out of the London property market no doubt.

The ending of tax relief on the purchase of goodwill where a company buys another business might have been expected as the government took steps recently to curtail tax relief on goodwill. Apparently goodwill is too much of a good thing.

The attractions of incorporating an existing business have been somewhat reduced by the changed tax regime on dividends – formerly an attractive way of withdrawing money from a company due to the lack of NIC on dividends. The government appears to be attempting to tackle the IR35 problem again. This is where people who would otherwise be considered employees set up a limited company and have their income paid into the company to be extracted in a more tax friendly fashion.

I hope you find it interesting and useful.

Please get in touch if I can help further.

Best wishes,

John

Mr Osborne described this second Budget as a ‘stability Budget’, explaining that his aim was to clarify policies announced in the Conservative’s pre-election manifesto and to announce further measures to keep Britain’s economy on the right track.

There has been much debate over the past weeks about how Osborne is likely to include measures perhaps less palatable to many UK tax payers, with reductions on certain tax reliefs and a crackdown on tax avoidance, as well as proposed cuts to public sector spending and welfare.

The Chancellor already intimated that he would like to see three million more people find apprenticeship places, so funding for these schemes has been widely anticipated.

Check back later today for your copy of the Budget Summary 8th July 2015.

I have summarised the Chancellor’s Autumn Statement, as presented in parliament this afternoon:

BUDGET AUTUMN STATEMENT DECEMBER 2014 (pdf).

Please don’t hesitate to contact me if you require this in another format or if you have any questions.

~ John Barfoot

Chancellor’s Budget Summary March 2014 

from John Barfoot FCCA

Photo from gov.uk

Chancellor’s Autumn Statement December 2013

For further information about this and other tax-related questions, please feel free to contact John, at 028 796 31343.