2017 Budget Highlights

Personal Taxation:

  • Personal allowance from 06/04/18 is £11,850 and rising to £12,500 from 06/04/19. This is the amount you can earn in a tax year without paying any tax.
  • Income Tax for 06/04/18 to 05/04/19 - Basic rate (20% tax) paid on earnings up to £46,350. Higher Rate (40% tax) paid on earnings from £46,351 to £150,000. 45% tax paid on earnings over £150,000.
  • Self Employed: Class 2 national insurance contributions (NIC) are currently £2.98 per week. Class 4 NICs are 9% of profits over £8,424 to £46,350. Over £46,350 it is 2%. Talks of combining Class 4 and Class 2 NIC for a 'new' NIC band have gone quiet.
  • Transferable married couples tax allowance is £1,190. This is usually only available if one partner earns less than £11,850.
  • Capital Gains Tax - From April 2018 the rates are 20% for higher rate tax payers and 10% for basic rate tax payers. The tax free allowance is currently £11,700 (tax year 2018/19).
  • HMRC to introduce Digital Accounting for the self employed and Landlords. This will introduce quarterly accounting and taxation. More details to be announced.

Savings from 6th April 2018:

  • For basic rate (20%) tax payers your first £1,000 of savings interest earned will be tax free. For higher rate (40%) tax payers your first £500 will be tax free.
  • There is an aditional starting rate for savers. If your Non-Savings Income (NSI) is more than £16,850 you are ineligible. If your NSI is less than £11,850 you get up to £5,000 interest tax free. Every NSI pound over £11,850 reduces your allowance by £1.
  • ISA savings tax free allowance is currently £20,000 per annum.

Rental Properties:

  • From April 2018 HMRC is reducing the amount of mortgage interest paid by landlords that can be offset against rental income. The tax relief you will get on your mortgage interest payments will be 2017/18 - 75%, 2018/19 - 50%, 2019/20 - 25% and in 2020/21 - zero.

Business Taxation:

  • Use of "personal service companies" by public sector employees to reduce tax liabilities to end.
  • Corporation tax is currently 19%.

Other News:
VAT - Making Tax Digital (MTD) Deadline
From April 2019 if you are VAT registered you can only submit your VAT returns electronically. HMRC are withdrawing it's free online filing system. If you currently use this you will then have to purchase a MTD compliant accounting software package for your VAT returns.

Self Assessment Filing Deadline
You only have until the 31st of January 2020 to submit your tax return for the tax year 06/04/18-05/04/19. Any delay will result in an automatic fine of £100. You then have to pay any tax owing (for 2018/19 and your first payment on account for 2019/20) also by the 31st of January 2020. HMRC will no longer be accepting credit cards as a payment method.

Invoicing Your Customers
Whether you are self employed or running a Limited Company, make sure you get the details on your invoice correct. Ensure you include all necessary information and you are complying with the law. Always include payment terms so your customers know the 'score' so you are more likely to receive payment for your goods or services on time.
For more details see:

Cash Accounting Scheme
This has been available from the 6th of April 2013. It is a Government scheme to help simplify the accounting for small businesses. Businesses will record income or expenditure only when they are received or paid. This will usually help your cash flow and probably reduce your tax, i.e. you will not need to include any income invoiced just before your year end which has not been received.
Limited companies are excluded from the scheme.
There are some disadvantages in entering the scheme. Namely, you can not claim any bank loan interest repayments as business expenses. There are others.

Contact us if you require help with any of the above.