As a small business owner I was really disappointed in this budget. As part of the Conservatives general election campaign David Cameron referred to small businesses as the economy’s “magic ingredient”. The budget that was delivered on 8th March 2017 clearly did not support this.
The Chancellor quoted a self-employed tax person earning £32,000 and paying £2,300 in tax, these figures were incorrect. As a sole trader in 2016/17 a business would pay £6,500.20 in tax and as a limited company combined taxes would be £5,630.38.
Since the start of the conservative government, using Mr Hammond’s £32,000 a business owners tax bill has increased by £840.78 per annum, this is a rise of 17.5%.
The main two changes that have an impact on small businesses are as follows:
The dividend nil rate band is reduced to £2,000 to £5,000 from 6th April 2018 (increase in £225 per annum for shareholders of owner managed businesses)
Class 4 NIC’s will rise to 10% from 6th April 2017 (then 11% from 6th April 2019 (the government have now U turned on this)
Other changes announced were:
The annual subscription limited for ISA’s increased to £20k
From 6th April 2017 only the following salary sacrifice arrangements maybe used to achieve tax and NIC savings:
Employer pension contributions and advice
Employer provided childcare
Ultra-low emission company cars
Personal Service companies (IR35):- Where a worker provides his services through a personal service company to a public sector body, it will be up to the public sector body or the agency to decide whether or not IR35 rules should apply. Shifting the onus onto the public-sector body.
A new £1000 allowance for property and trading income.
VAT registration limit increase to £85,000 from £83,000 (the de-registration limit has also increased to £83,000 to £81,000).
Delays were also announced for Making tax digital until April 2109, once the detail is available I will provide a separate blog post.