Author: JP / / Latest News
It was hard to miss the fact Mr Hammond delivered his second budget of his career on Wednesday (22/11/17). But now the dust has settled, his speech is over, and the budget papers have been deciphered. So, how can it possibly affect your business?
In the last Autumn Statement, VAT was raised to 16.5%.
This Autumn’s Budget left VAT alone. The threshold is still £85,000 and it will remain that way until 2020.
And VAT still remains at 16.5%.
The UK’s threshold of £85,000 is a lot higher than the EU average of £20,000. Before the Budget, the Budget Office of Tax Simplification recommended lowering the UK threshold to £25,000. They claimed that in doing so it would bring in £2 billion per year to the exchequer.
The National Chairmen of the Federation of Small Businesses, Mike Cherry, was happy with the decisions not to lower the threshold. He said if the threshold was lowered, it would drag thousands of businesses into the hugely complicated VAT regime in an already challenging time for businesses.
I was announced in the budget, that the swap in inflation measurement from RPI to CPI was to take place from April 2018.
In doing so, this has scrapped the near 4% rise in business rates.
CVS, a business rates specialist, predicted if we carried on with RPI, that it would have added £781,000,000 in bills in the next two years, compared to CPI.
Along with swapping to CPI, the announcement, to many business owners delights, was the abolishment of the staircase tax.
The staircase tax hit those who used several floors in the same property for their business.
Research and Development
In the his speech, Hammond announced how he was putting an extra £2.3 Billion towards Research and Development.
The expenditure credit will rise 1% from 1st January 2018 to 12%.
National Living Wage
The National Living Wage is set to rise again.
Hammond announced that from April 2018, the national living wage for over 25’s will be £7.83 per hour.
Personal Tax Allowance & Higher Rate Tax
The Chancellor announced a rise in the personal tax allowance.
It will now be £11,850 opposed to £11,500.
And higher rate tax will increase to £46,350.
Fuel rates have been frozen again.
That being said, diesel cars will see an increase in road tax, in its first year. The less eco-friendly diesel cars will see owners paying more road tax with excise duty going up one band; although if the new generation of diesel cars are more eco-friendly, they will not face this levy.
This only applies to cars and White Van Drivers will not be hit by the new rules.
New Capital Gains Tax allowances were in the budget, but not in Hammonds speech.
The annual exempt allowance for CGT will rise to £11,700 in April 2018. This was previously £11,300.
Marriage Allowance allows a spouse or civil partner to transfer 10% of their personal tax allowance to their income tax paying partner.
The changes now extend to widows and widowers, who can now make retrospective claim and that can be back dated for four years.
Pension Cold Calling
Less business related, but something that can effect everyone is cold calling. The ban on pension cold calling has now been brought forward to early 2018.
You can find more announcements and tax rates by reading our free budget booklet. This can be found on our website, under resources, or following this link – Free Budget Booklet.