BAS Associates and the Autumn Statement Review.
Raspberry to the JAM’s?
Main Tax Announcements
- VAT Flat Rate anti-avoidance measures announced
- Insurance premium tax to increase from10% to 12% from 1 June 2017
- Corporation tax rate to reduce to 17% in 2020
- National Insurance threshold to be raised to £157 a week for employees and employers
- Personal allowance to increase to £11,500 in 2017/18, rising to £12,500 by 2020/21
- Business tax “roadmap” to continue, in particular new rules for company losses
- Higher rate tax threshold to increase to £45,000 in 2017/18, rising to £50,000 by 2020/21
JAM’s are the ‘Just About Managing’ group of us. That’s most of us I would suspect. There are allowances that have been changed, meaning we will pay les income tax and keep more of what we earn.
Corporation Tax is being decreased by 1% from 1 April 2017 and discussions of an even lower rate to follow.
Flat Rate VAT ‘Abuse’.
Well, this is probably the key part of MR Hammond’s announcements for many of our Clients. This is a simple scheme that enables small businesses to calculate and pay their VAT based on a flat rate percentage of total takings rather than deducting input tax on purchases and expenses and deducting that from total output tax on sales in the period. It is believed by HMRC that the scheme is being abused so is applying new rules.
The flat rate percentage varies depending on the nature of the business, ranging from 4% for food retailers up to 14.5% for IT consultants and labour only construction workers. From 1 April 2017 a new 16.5% rate will apply for businesses spending less than 2% of their turnover or less than £1,000 per year on goods, excluding capital goods, food, vehicles and fuel. BAS Associates advice is that any business affected will almost certainly be better off returning to the normal VAT system with effect from that date. If you are currently using the flat rate scheme please contact BAS Associates to check whether this change is likely to affect your business.
Corporation Tax rate reduction.
Currently corporation tax is 20% and will fall to 19% from 1 April 2017 if the Government plan is carried through, as it plans to keep the UK as the lowest in the G20. The kicker to this is that the Chancellor believes that there continues to be a rise in incorporations encouraged by the rates when compared to unincorporated businesses. BAS Associates believes that there is a bigger picture which will eventually lead to tax treatment of both entities being the same, and hence creating a level playing field. This is likely to be a slow transition, so we will be looking at your individual circumstances to decide if there are is a better way for your tax treatment.
Call us on 01442 560050 (Northchurch) or 023 8202 7681 (Dibden New Forest) to chat with our specialists, or use our contact page.
BAS Associates are accountants based in Northchurch, Herts and Dibden, near Southampton and the
New Forest. We are also happy to help clients including nearby locations as Chesham, Tring and Berkhamsted, as well as an area encompassing Marchwood, Dibden Purlieu, Hythe and Hardley.