Chancellors’ spring budget March’17
Following the tabling of the Chancellors’ Spring Budget on the 8th of March 2017, majority of the tax payers will be glad only a few adjustments were made to the landscape. Primarily, the budget confirmed the changes that were announced in the Autumn Statement, plus a few new measures that are likely to affect Limited Company Contractors.
Let’s break down the Key Spring Budget for Limited Company Contractors:
This tax-free Dividend Allowance that is supposed to take effect as from 6th April 2018 didn’t appear in the Autumn Statement. Dividend allowances will be reduced from 5,000 down to 2,000.
Limit of ISA Savings
In a move to counter-balance the effect of the changes made to the Dividend Allowance, the Chancellors announced a new ISA Savings Limit of 20, 000 for the year 2017/2018 from the 15, 240 limit for the year 2016/2017 currently in effect.
Off-Payroll in the Public Sector (IR35)
Though a few changes have been made to the draft legislation, these measures will take effect as from 6th April 2017.
VAT Flat Rate Scheme (FRS)
Changes to this scheme are scheduled to take effect as from 1st April 2017. Plus, new category known as the New Limited Cost Business will be introduced.
Tax Evasion and Avoidance Measures
A number of measures have been put in place with those enabling tax avoidance schemes being the most notable ones. A new Enabler Penalty will be used to those tax avoidance schemes found to be ineffective.
As announced before, the corporation tax rate will drop from 20% to 19%. This will take effect as from the beginning of the new Financial Year that starts on 1st April 2017.
Corporate Gains Tax
The usual annual exemption of the CGT will be increased from 11, 100 for the year 2016/2017 to 11, 300 for the year 2017/2018.
Digitalizing Business Tax System
A project under the title “Making Tax Digital for Business” is being rolled out extensively in regard to how taxpayers record and report income to the HMRC department. As outlined in the Spring Budget, a one year deferral that snatches MTDFB. The mandate of dealing with the unincorporated business and unincorporated buy will be put in place. Instead, it allows those landlords whose turnovers are below the VAT threshold of 83, 000.
New consultations were announced but those that that are expected to notably affect contractors include:
- Employee Expenses and Benefits in Kind
- Consultations on Rent a Room Relief
- Disguised Remuneration (Again)