Hot off the heels of the Brexit negotiations and facing a downgraded official economic growth estimate by the OBR (Office for Budget Responsibility), the Chancellor’s Autumn Budget focused very much on boosting the UK’s productivity and building greater self-sufficiency.
Leading initiatives announced focused on the development of the UK’s infrastructure, skills, tech, small businesses and the housing market.
As always the full implications of the Chancellor’s Speech are not clear until The Treasury releases the detail behind all the statements and promises. Here’s our take on the key headlines for BTCSoftware customers and their clients.
Nurturing UK innovation
Keen to boost UK innovation the Government announced it would allocate a further £2.3billion for investment in R&D. It plans to fund an increase in the Research and Development tax credit to 12%. It is also wants to increase the number of UK tech businesses and is setting up a new Regulators’ Pioneer Fund and doubling EIS (Enterprise Investment Scheme) investment limits from £1m to £2m for knowledge intensive companies. Relief will be restricted, however, to riskier businesses through anti-avoidance measures and further detail on the criteria for EIS investments is likely to follow.
Personal and business tax implications
Key personal and business tax changes which BTCSoftware customers should be aware of are:
- The income tax threshold will be raised to £11,850 in April, from its current threshold of £11,500
- The higher rate income tax threshold will rise from £45,000 to £46,350. The Government had already pledged to increase this to £50,000 by 2020-21.
- There was no announcement on Corporation Tax changes, however from January 2018 the Government plans to remove the anomaly of the indexation for capital gains for companies, to bring the corporate system in line with personal capital gains tax. The indexation allowance will now be frozen so that companies receive relief for inflation only up to January 2018, but not afterwards.
- VAT threshold – despite all the rumours of recent weeks, the Chancellor has promised to keep the VAT threshold at £85,000 for the next 2 years. Expect a consultation, however, as the Chancellor is obviously keen to rethink the UK’s approach.
Other implications for small businesses
- Company cars – company cars (but not vans) using diesel are to incur a 1% increase in company car tax. From April 2018, the Vehicle Exercise Duty rate for diesel cars that don’t meet the latest CO2 emission standards will go up by one band. In contrast it would appear further incentives are on the way for those using electric cars – the Chancellor promised to clarify the law for those who charge their electric vehicles at work, so they don’t face a benefit-in-kind charge from next year. And whilst on the subject of cars, the proposed fuel duty rise scheduled for April on both petrol and diesel has been cancelled.
- The National Living Wage – is to rise from £7.50 an hour to £7.83 from April next year
- Business Rates – Following on from the Business rate relief announcements in the 2016 Budget and the 2017 Spring Budget, the Chancellor announced to bring forward the planned switch from the retail prices index (RPI) to the consumer prices index (CPI) by two years, to April 2018. The Government estimates the move is worth £2.3bn to businesses over the next five years.
- Property market and construction – For those accountancy clients with interests in the property letting market, the Chancellor announced new powers to Local Authorities to charge a 100% council tax premium on empty properties. He also will launch a consultation on the barriers to longer tenancies in the private rented sector, and hinted at seeking ways to encourage landlords to offer these types of tenancies. For those accountancy clients involved in property development and construction, the Government has said it is committing £44billion of capital funding, loans and guarantees to support the housing market, boost construction skills and ‘unlock’ sites. Looking to win over young first-time buyers, stamp duty changes were announced. With immediate effect the first £300,000 of a first time buyer’s property (up to a purchase price of £500,000) will not incur stamp duty.
No mention of Making Tax Digital?
After the delays announced in the summer, there was no further mention in the Chancellor’s Budget about Making Tax Digital.
Rest assured
BTCSoftware customers can rest assured that we will be following the developments from the Chancellor’s Autumn Budget as they emerge and our software and app will adapt to reflect new tax rates and changes. We will ensure the accountants and tax advisers we support have all the tools they need to help their clients comply with the latest changes and regulations.
