On Wednesday 22nd November, the Chancellor of the Exchequer, Philip Hammond, announced the Autumn Budget – what was expected to be a ‘bold, make it or break it’ announcement, quickly turned into a somewhat mellow event for Contractors and Freelancers.
There were no drastic measures announced which changes the way Contractors operate, but here’s everything you need to know about the Budget announcement, presented by our very own New Business Manager, Craig Whelan.
Personal Tax
From 6th April 2018, the Personal Allowance will increase to £11,850, and the Higher Rate Threshold will increase to £46,350. The starting rate threshold for savings will remain at £5,000. Although the Dividend Allowance was not mentioned in this Budget, it is scheduled to reduce from £5,000 to £2,000 from 6th April 2018.
National Insurance
As previously announced, the government has decided not to proceed with increases to Class 4 NI, paid by the self-employed.
Corporation Tax
The rate of Corporation Tax will remain at 19%, as previously planned, in 2018. However, Indexation Allowance which is applied in calculating gains on investments held by companies will be frozen from 1st January, bringing the Corporate Tax system in line with Personal Tax for Capital Gains.
VAT
Despite speculation ahead of the Autumn Budget, the VAT registration threshold will remain at £85,000 for a 2-year period from April 2018. However, a consultation is expected on the future design of the threshold in view of the fact that this is the highest in the OECD.
The Office of Tax Simplification published its first review on Simplifying Tax. The review considers three key aspects:
- The issues and impacts involved if the VAT registration threshold were either higher or lower than at present.
- Administrative changes which could help businesses, advisers and HMRC better achieve their common aim of easing friction points in the system.
- The extent to which the definitions of the types of supply which are currently relieved from VAT create complexity for businesses and administration.
Findings from the report can be found here.
Making Tax Digital
Making Tax Digital will commence on April 19 for VAT Registered businesses whose turnover exceeds the compulsory VAT registration threshold. The scope of MTD will not be widened until it’s proven to work.
Employment Status/IR35
Despite speculation leading up to today’s Budget, there was no mention of IR35 in the Chancellor’s speech, however, the red book referred to a consultation which is due to be published during 2018. We would not anticipate any changes resulting from the consultation to be announced until the next budget (this time next year) or to take effect until April 2019.
The full Autumn Budget can be found here.
Despite a bold and bruising Spring Budget 2017, it’s fair to say that the Autumn Budget announcement was a mellow event for Contractors and Freelancers across the UK.
Gorilla Accounting is a specialist accountancy firm, exclusively for Contractors and Freelancers operating through a Limited or Umbrella Company.If you would like more information, get in touch with our New Business Team by calling 0330 024 0406 or email info@gorillaaccounting.com.
