Well the budget happened on Wednesday 22 November and Philip Hammond made a few jokes about Strepsils, I’m a Celebrity Get Me Out of Here, and drinking just water! With jokes aside there were a few items that were introduced in the Budget which we though would be of interest to you.

I think that the phrase most stated in this budget was “building an economy that is fit for the future”.

Allowances and tax rates

The dividend allowance will be reduced from £5,000 to £2,000 from April 2018. The abolition of class 2 NIC will not take place until April 2019. It has been delayed by a year.

Business rates

The calculation of business rates will be switched from retail price index to consumer price index. This will mean lower increases for businesses. Also valuations will occur every 3 years after the next planned valuation.

Corporation tax

With the freezing of indexation allowance from the beginning of January 2018, companies will no longer be able to offset inflation against their chargeable gains. The companies most hard hit by this freezing are property companies.

Council tax

Local authorities are to be given powers to increase the council tax premium on empty properties from 50% to 100% .

Enterprise Investment Scheme (EIS)

The annual amount investors can put into an EIS has doubled to £2m provided the money goes to knowledge–intensive companies.

Graduates

Graduates who started their studies after September 2012 will not have to repay their loans unless they earn over £25,000.

Making Tax Digital

Making tax digital will be mandatory for those whose turnover is over the VAT threshold from April 2019. At this time it will only be a requirement for VAT obligations.

National living wage rates

This will rise from £7.50 per hour to £7.83 from April 2018. This is an increase of £600 a year for a full-time employee. Minimum hourly wage rates will be increased: 21-24 year old will rise to £7.38; 18-20 year old will rise to £5.90; 16-17 year olds will rise to £4.20; apprentices under 19 or int eh first year of their apprenticeship will rise to £3.70.

Non-resident companies with UK rental income

At the moment these companies pay income tax on their profits from their rental income and capital gains tax on the sale of assets. From April 2020, non-resident companies with UK rental income will pay corporation tax on their rental profits and their capital disposals.

Pensions

The annual pension contribution maximum amount will remain at £40,000.  The lifetime allowance will increase from April 2018 to £1,030,000.

Personal allowances

From April 2018 the personal allowance will increase from £11,500 to £11,850. The higher rate tax threshold will increase from £45,000 to £46,350.

Research and Development

The research & development expenditure credit has been increased from 11% to 12%.

Road tax and fuel

This will be increased for diesel cars but not vans. New diesel cars will see an increase of up to £500 from April 2018. Examples are: Ford Focus, Peugeot 208 up by £20; BMW 6 series up by £300; Land Rover Discovery up by £400; Porsche Cayenne up by £500. Fuel duty was frozen for the eighth year in a row.

Stamp duty

This government will permanently exempt first time buyers from stamp duty for properties up to £300,000, with purchasers benefiting on homes up to £500,000. This is a stamp duty saving of up to £5,000.00

Tobacco and Alcohol

Tobacco has increased by 2 percentage points above inflation. This means it adds 28p to a pack of 20 cigarettes. Duties on beer, cider, wine and spirits will be frozen.

Universal credit

Claimants will have to wait only 5 weeks instead of 6 weeks for their first benefit from February 2018. Housing benefit claimant will also receive it for extra 2 weeks while waiting for their universal credit payments to start.

VAT

It was speculated that the VAT registration threshold will be reduced. This did not happen even though England has one of the highest VAT thresholds in Europe. Watch this space as it may happen in the future. Sellers on Amazon, Ebay and other online marketplaces are being watched for the VAT limits. The online giant will no longer be able to turn a blind eye as they will become jointly liable for paying VAT alongside the sellers.

The budget was discussed on the Ridge Radio business show and can be listened to on www.mixcloud.com/chantalbaker or via the Champ Consultants facebook page, where it was recorded live.

Matthew Baker

Matthew Baker

Chartered Certified Accountant at Champ Consultants
Matthew co-founded Champ Consultants in 1999 and has grown it to be the local business it is today. He understands the growing pains accountancy departments go through in medium size companies and can help small businesses to manage their bookkeeping so that they can run their business more effectively.
Matthew Baker

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