Edward Parker FCCA on the key things to watch out for following the Chancellor's Spring Statement.
The days of two Budget announcements per year with the Spring one described as a mini-Budget, are over. Instead the Spring Statement is now a short financial briefing and as promised, Chancellor Phillip Hammond proved true to his word. There were no surprise spending measures or tax announcements. This means there wasn't a great deal of news for businesses or individuals.
The Office for Budget Responsibility (OBR) trimmed its projections for government borrowing, but not by as much as had been expected. The Chancellor then banked the savings for the Autumn Budget while government spending will be subject to a detailed review in 2019.
The Chancellor's statement was followed by the publication of a range of documents covering the following areas:
English business rates
The next revaluation of business property in England will be brought forward from 2022 to 2021 with revaluations conducted over a three-yearly cycle thereafter.
A consultation paper was produced on entrepreneurs’ relief. This is for circumstances where it would otherwise be lost because a new share issue reduces a shareholding below the required 5% mark.
Tax and the digital economy
The government are examining taxation in relation to the digital economy. For some time there has been concern that people using online platforms aren't paying their fair share when it comes to VAT and income tax.
The government is looking into restructuring the VAT registration threshold in order to offer more incentives for small businesses to grow. There is concern that businesses limit growth to avoid crossing the current £85,000 threshold (which is frozen for the next two years).
Potential options include increasing tax rates as turnover rises, or applying different rates for different types of business.
Self-funded work-related training
A consultation paper was published examining how to extend the existing tax relief framework to self-funded work-related training by employees and the self-employed. The reason being over 1 million people paid for their own training in 2016 according to HMRC.
The upcoming tax changes you need to be aware of
Many of these documents could be enacted in legislation, meanwhile the tax changes announced in the Autumn Budget 2017 (and some from earlier Budgets) will come into force in the new, 2018/19 tax year. Some of these include:
Increases to the personal allowance, and basic and higher rate tax thresholds
A reduction in the dividend tax allowance from £5,000 to £2,000
A rise in the diesel levy and changes to company car tax scales
For the first time in 8 years, an increase in the pension lifetime allowance
An increase in the maximum tax relievable investment in Enterprise Investment Schemes
Be sure to access and download our tables for the 2018/19 tax year. Finally, although it wasn't mentioned by the Chancellor, the government are digitising taxation which has profound implications for businesses and individuals. This requires a review of accounting systems and software with a view to switching to digital record keeping via the cloud. You can find out more here in how to best prepare for making tax digital.
The content of this post is up to date and relevant as at 15/03/2018.
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