Chancellor Philip Hammond presented the first Autumn Budget to the House of Commons on November 22. Here are some of the highlights affecting businesses.
The level of taxable turnover which requires a business to register for VAT is currently set at £85,000 and will remain at this level until at least March 2020. The deregistration limit will also stay the same at £83,000.
In the March budget, the Chancellor announced that the rates of Class 4 National Insurance Contributions (NIC) would increase for self-employed individuals.
Following heavy criticism that this rise was contrary to a manifesto pledge at the 2015 General Election, this proposal was dropped by the government. This pledge was not repeated in this year’s manifesto, however, the Chancellor confirmed that the changes would not be implemented for now.
It was previously announced that Class 2 National Insurance Contributions would be abolished in April 2018, with self-employed individuals who wished to contribute to their state pension record paying Class 4. Those that make low profits do not pay Class 4 and would have to contribute to their record by paying Class 3 which are significantly higher than Class 2. The government has now delayed the abolition of Class 2 NIC until April 2019.
Companies who incur expenditure on qualifying research and development (R&D) costs can benefit from extra reliefs for corporation tax. The current rate of R&D expenditure credit available under the large company scheme is currently 11% and this will increase to 12% from January 1, 2018, to encourage further investment.
The way in which companies compute capital gains has been different from individuals and trusts since 1998. Extra relief is given to companies by way of the ‘indexation allowance’ which effectively accounts for inflation.
The National Minimum Wage (NMW) and the National Living Wage (NLW) will increase from April 2018, and the new hourly rate for those aged 25 or over will be £7.83 per hour which represents a 4.4% increase.
Advice specific to circumstances should be taken and if you require assistance in connection with this or any other tax matter, please contact Magnus Leonard as above,