03 - Autumn Budget 2017 - Tax impact on OMB's
Below is a summary of the tax policy measures announced in the Autumn Budget 2017, and how they impact on owner managed businesses (OMBs). Overall, the budget was largely uneventful from a tax point of view, and so there is not a great deal to say.
Highlights: -
- The income threshold before individuals begin to pay higher rate tax increased by £1,350 to £46,350 from 6 April 2018
- Dividend allowance reduced by £3,000 to £2,000 from 6 April 2018 - This does not affect the tax planning strategy of an OMB, but will mean that the tax charged on dividends will increase by £225 for most owners.
- Main rate of corporation tax held at 19%, despite previous announcements that it would fall.
- VAT registration threshold to be maintained at £85,000 until 31 March 2020 - there had been previous suggestions that the threshold could be cut to as low as £20,000 as part of this budget
- Employers will not be required to check receipts if employee claiming standard meal allowance from April 2019 (up to £5 a day if working over 5 hours or more). Employer required to ensure that qualifying travel has taken place.
Other tax rates and allowances changes for 2018-19: -
- Basic rate band increased £1,000 to £34,500
- Personal allowance increased by £350 to £11,850 (in line with inflation)
- NIC Lower Profits Limit (limit where employee/employer begins to pay NIC) increased by £260 to £8,424- NIC Upper Profits Limit (limit where employee's NIC rate drops to 2%) increased by £1,350 to £46,350
- Capital gains tax annual exemption increased by £400 to £11,700
- The percentages used to calculate tax on company cars will increase
- R&D tax credit rate increased from 11% to 12% (from 1 Jan 2018)
For full details of the 2018-19 tax rates, see here.
Other employment related measures
- A consultation to try to clamp down on non-compliance with the !R35 rules. The IR35 rules attack arrangements where employees avoid tax by providing their services to their employer through their own limited company. The likely out come would be to put the onerous on the employer to ensure that the the employee is correctly taxed.
- National Living Wage increase from £7.50 per hour to £7.83 per hour from April 2018
- National Minimum Wage will also increase from April 2018 as follows:
- - 21 to 24 year olds - £7.38 per hour
- - 18 to 20 year olds - £5.90 per hour
- - 16 and 17 year olds - £4.20 per hour
- - Apprentices - £3.70 per hour
Other OMB related measures
- Disincorporation relief to expire on 31 March 2018
Other measures of interest
- Child benefit remains the same (£20.70 for first child, £13.70 for subsequent children)
- Landlords can use the mileage scheme (45p/25p per mile) for business travel form 6 April 2017
- Abolishon of stamp duty on homes under £300k for first time buyers, effective immediately