Chancellor Philip Hammond presented the first Autumn Budget to the House of Commons on 22nd November. Here are some of the highlights affecting businesses.
The level of taxable turnover which requires a business to register for VAT is currently set at £85,000 and will remain at this level until at least 31st March 2020. The deregistration limit will also stay the same at £83,000.
In the March budget, the Chancellor announced that the rates of Class 4 National Insurance Contributions (NIC) would increase for self employed individuals. Following heavy criticism that this rise was contrary to a manifesto pledge at the 2015 General Election, this proposal was dropped by the government. This pledge was not repeated in this year’s manifesto; however the Chancellor confirmed that the changes would not be implemented for now.
It was previously announced that Class 2 National Insurance Contributions would be abolished in April 2018, with self employed individuals who wished to contribute to their state pension record paying Class 4 NIC. Those that make low profits do not pay Class 4 NIC and would have to contribute to their record by paying Class 3 NIC which are significantly higher than Class 2 NIC. The government has now delayed the abolition of Class 2 NIC until April 2019.
Companies who incur expenditure on qualifying research and development (R&D) costs can benefit from extra reliefs for corporation tax. The current rate of R&D expenditure credit available to companies claiming under the large company R&D scheme is currently 11% and this will increase to 12% from 1 January 2018 to encourage further investment in this area.
The way in which companies compute capital gains has been different from individuals and trusts since 1998. Extra relief is given to companies by way of the ‘indexation allowance’ which effectively accounts for inflation. The indexation allowance will freeze with effect from 1 January 2018, and for disposals of capital assets by companies on or after 1 January 2018, indexation allowance will only be calculated up to 31st December 2017.
The National Minimum Wage (NMW) and the National Living Wage (NLW) will increase from April 2018, and the new hourly rate for those aged 25 or over will be £7.83 per hour which represents a 4.4% increase.
The next major event in the Chancellor’s new timetable will be the Spring Statement in early 2018. Prior to this, a draft Scottish budget will be published on 14th December 2018.
Advice specific to circumstances should be taken and if you require assistance in connection with this or any other tax matter, please contact Magnus Leonard at Rennie Welch on 01573 224391 or by email at email@example.com.
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