The 2017 Autumn Budget Statement: in brief
The 2017 autumn statement contains both forecast and performance data and the proposals of the chancellor for the next year or more. Rather than give an overview of everything in the statement, we're concentrating here on the main measures which will or could affect small businesses and business owners.
So - in no particular order - here are the main changes which could affect you....
1. Personal tax allowances
The tax-free personal allowance will increase from £11,500 to £11,850 from 6 April 2018.
The basic rate threshold will increase from £33,500 to £34,500 as of 6 April 2018. This means for most people the higher rate threshold will increase to £46,350.
The capital gains tax (CGT) annual allowance will increase from £11,300 to £11,700 for individuals and from £5,650 to £5,850 for most trustees of a settlement from 6 April 2018.
The 0% starting rate for savings will be maintained at the current level of £5,000 for 2018/19.
National Insurance: The implementation of the proposed reforms to the national insurance contributions (NICs) system, to include the abolition of class 2 NICs, will be delayed by a year and will now take effect from April 2019.
As previously announced, the proposal to increase class 4 NICs from 9% to 10% in April 2018 and then to 11% in 2019 will no longer proceed.
The national living wage will be increased from £7.50 to £7.83 per hour from April 2018, for those aged 25 and over.
The national minimum wage rates will also increase as follows:
- apprentices: £3.70 per hour
- 16 and 17-year-olds: £4.20 per hour
- 18 to 20-year-olds: £5.90 per hour
- 21 to 24-year-olds: £7.38 per hour.
The VAT threshold - the turnover amount above which you need to register for VAT - will remain at £85,000 for 2 years from April 2018.
4. Capital allowances
The annual investment allowance will remain at £200,000 for 2018/19 and 2019/20.
The main rate and special rate writing down allowance on plant and machinery will be 18% and 8%, respectively. The 100% first-year allowance for businesses purchasing zero-emission goods vehicles or gas refuelling equipment will be extended for a further 3 years.
For zero-emissions goods vehicles, the scheme will end on 31 March 2021 for corporation tax and 5 April 2021 for income tax. For gas refuelling equipment, the scheme will end on 31 March 2021 for both corporation tax and income tax. The list of technologies and products covered by the energy saving irst-year allowances has been updated. It adds 3 new products, which include evaporative air coolers, saturated steam to electricity conversions and white LED lighting modules to the list.
The measure also modifies 9 and removes 2 items from the list. The scheme allows 100% of the cost of an investment in qualifying plant and machinery to be written off against the taxable income of the period in which the investment was made.
5. Company cars and vans
From 6 April 2018, the van benefit charge will increase from £3,230 to £3,350 and the van fuel benefit charge will increase from £610 to £633.
Employees provided with fuel for private mileage in a company car will see the value of the multiplier used for calculating the cash equivalent of the fuel beneit increase from £22,600 to £23,400. This measure will apply from 6 April 2018. The diesel supplement used to calculate the company car beneit and company car fuel beneit will increase from 3% to 4% for all diesel cars registered on or after 1 January 1998 that do not meet real driving emissions step two standards. (RDE2). Diesel cars which are certiied to RDE2 standard will not be liable to the diesel supplement. The maximum appropriate percentage applied for cars, including any diesel supplement, will remain at 37%..
6. Corporation tax
The main rate of corporation tax will remain at 19% from 1 April 2018.
The government will consult in 2018 on tackling non-compliance with the intermediaries’ legislation (commonly known as IR35) in the private sector. The purpose of the legislation is to ensure individuals who effectively work as employees, but structure their work through a company, are taxed as employees. The consultation will explore the possibility of extending the recent public sector reforms to the private sector.
8. Business Rates
There are a number of measures relating to business rates, which include:
- bringing forward the planned switch in indexation from RPI to CPI to 1 April 2018
- continuing the £1,000 business rate discount for public houses with a rateable value of up to £100,000, subject to state aid limits for businesses with multiple properties, for 1 year from 1 April 2018
- legislating retrospectively to address the so-called ‘staircase tax’ to enable affected businesses to ask the Valuation Ofice Agency to recalculate valuations so bills are based on previous practice backdated to April 2010
- moving to revaluations every 3 years following the next revaluation, which is currently due in 2022.