Spring Budget 2017 - Key Changes for the Self-Employed
This week saw the Chancellor’s first and last spring budget, with lots announced that will give those of us who are self-employed lots to think about. Let’s take a closer look at some main points of the budget.
Let’s start with some good news! Making Tax Digital (don’t know what that is? I’ve got you covered) will be now not kick in until April 2019 for those businesses with turnover under £85,000. This will give smaller businesses more time to make plans for meeting the quarterly reporting requirements. We’ll need to wait until the draft Finance Bill on 20 March to see whether the £10,000 threshold for Making Tax Digital will also be raised.
Increase in the VAT registration threshold to £85,000, with effect from 1 April 2017. The new de-registration threshold will be £83,000 - particularly useful to know if you’ve been considering de-registering as a result of changes to the Flat Rate Scheme.
Director of a limited company? A lot of owner-directors will see their tax bill increase by £225, with the dividend allowance being cut from £5,000 to £2,000.
This is the big one for a lot of people, and has caused quite the stir! Class 4 National Insurance contributions (NIC) will increase from 9% to 10% from 6 April 2018, and then to 11% from April 2019. There has been a lot of opposition to this since the announcement on Wednesday, with legislation now being deferred to the autumn. A review of workers' rights and labour practices, headed by Matthew Taylor, is currently underway and includes access to maternity, paternity, sick, and holiday pay. The NIC changes will now be introduced once the review is complete, with Downing Street implying that this will be alongside improved benefits for the self-employed.
Want to discuss how the changes will affect you? Get in touch for no-obligation consultation.