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Making Tax Digital

The Government seem intent on forcing the Self Employed to eventually file quarterly figures for Income Tax but thankfully the timetable of this reform has been delayed until at least April 2020. VAT registered businesses will however be mandated to use the Making Tax Digital for Business system to meet their VAT obligations from April 2019. This will apply to businesses who have a turnover above the VAT threshold – the smallest businesses will not be required to use the system yet, although they can choose to do so voluntarily.

https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital

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Budget Reports and Statements

Main items of interest to the majority of small businesses will be:

  • Personal allowances and national insurance rates, please follow tax data information link above.
  • Dividend allowance of £5,000 reduced to £2,000 from April 2018.
  • You can get up to £1,000 a year in tax-free allowances for property or trading income from 6 April 2017.
  • The Corporation Tax rate has already reduced to 19% and is still proposed to reduce to 17% from April 2020.
  • VAT registration limit to remain at £85,000 until April 2022 and the deregistration limit £83,000.
  • Reform of CGT lettings relief from April 2020 for landlords, the government is to undergo consultation on proposed changes.
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CIS Scheme

The new CIS scheme, in operation since  April 2007, contains many penalties and risks to Contractors. For more information on how the scheme works, click on the link below for HM Revenue Customs guidance but preferably please contact us for a more detailed explanation. Beware of H M Revenue interpretation on self employed status, it is not law and incorrect, there have been many tax cases on this issue in the last couple of years which detail the current law. Also, care must be taken to ensure gross payment status is not lost through late payments of tax.

https://www.gov.uk/topic/business-tax/construction-industry-scheme